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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees:
July 2011: 

Disadvantaged Students: 

School Districts Have Used Title I Funds Primarily to Support 
Instruction: 

GAO-11-595: 

GAO Highlights: 

Highlights of GAO-11-595, a report to congressional committees. 

Why GAO Did This Study: 

Title I of the Elementary and Secondary Education Act (ESEA), as 
amended, is the largest federal education funding source for 
kindergarten through grade 12. In fiscal year 2010, Congress 
appropriated $14.5 billion for Title I grants to school districts to 
improve educational programs in schools with high concentrations of 
students from low-income families. ESEA includes accountability 
requirements for schools and districts that focus primarily on 
measuring academic outcomes rather than prescribing exactly how Title 
I funds are to be spent. ESEA, as amended, includes a mandate that 
requires GAO determine how selected districts expend Title I funds. In 
response, GAO addressed (1) how selected school districts spent their 
Title I funds and (2) what federal mechanisms are in place to oversee 
how Title I funds are used and what is known about the extent of 
noncompliance with relevant requirements. To do this, GAO visited a 
nongeneralizable sample of 12 school districts in 4 states and 
analyzed their Title I expenditures for the 2008–2009 school year. GAO 
also reviewed federal and local audit findings for a wider range of 
states and districts. Districts were selected based on criteria in the 
mandate including variation in size, student demographics, location, 
and economic conditions. 

What GAO Found: 

GAO found that 12 selected districts in Louisiana, Ohio, Rhode Island, 
and Washington used Title I funds primarily for instructional 
purposes, consistent with findings from other research. Most selected 
districts focused Title I activities at the elementary level, where 
they expected the greatest improvement in academic achievement. Title 
I funds supported district initiatives to improve academic outcomes, 
such as reducing class sizes, extending class time, and coaching Title 
I teachers. The selected districts generally spent the majority of 
Title I funds on salaries and benefits, largely for instructional 
personnel. Districts with schools that failed to meet state adequate 
yearly progress goals for two or more consecutive years were required 
by law to reserve funds for various initiatives, such as 
transportation for public school choice, supplemental educational 
services, and professional development. In some districts such set-
asides, which do not flow directly to schools, accounted for sizable 
portions of funds, amounting in two districts to 28 percent of Title I 
revenue. Predictably, such districts spent more than other districts 
on purchased services, such as tutoring for students eligible for 
supplemental educational services. 

Title I recipients are subject to various oversight mechanisms, which 
provide some information on noncompliance with relevant spending 
requirements, but are not designed to provide estimates of the 
prevalence of noncompliance. The Department of Education (Education) 
has conducted state-level monitoring to assess states’ Title I program 
implementation. It has identified common issues, such as failure to 
ensure that districts properly calculate or reserve funds for specific 
purposes. To guard against fraud and abuse, Education’s Office of 
Inspector General (OIG) uses risk-based criteria, such as past audit 
findings, to select districts for financial audit. In such districts, 
OIG has found instances of unallowable expenditures of Title I funds. 
Also, all states and districts that spend more than $500,000 in 
federal awards must file an annual audit that focuses on financial 
management and compliance with provisions of selected federal 
programs. Roughly 18 percent of districts that filed a fiscal year 
2009 audit in which Title I compliance was reviewed had findings 
related to Title I, which most commonly dealt with unallowable costs 
and cost principles. However, only a subset of districts are audited 
for Title I compliance in any given year. When any type of oversight 
identifies noncompliance, school districts and states must identify 
and take corrective actions. Education also uses results of oversight 
and monitoring to target future monitoring efforts and to develop 
technical assistance and training to assist states and school 
districts in using their resources and flexibility appropriately. 

What GAO Recommends: 

GAO is not making recommendations. Education provided technical 
comment on a draft of this report, which we incorporated as 
appropriate. 

View [hyperlink, http://www.gao.gov/products/GAO-11-595] or key 
components. For more information, contact George Scott at (202) 512-
7215 or ScottG@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Selected School Districts Used Funds to Support a Variety of 
Initiatives, Primarily Related to Instruction, to Improve Student 
Outcomes: 

Various Title I Oversight Mechanisms Exist, But Are Not Designed to 
Yield Estimates of the Full Scope of Spending Noncompliance: 

Agency Comments: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: School District Profiles: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Table: 

Table 1: Strengths and Limitations of Using Title I Oversight 
Mechanisms to Assess Extent or Severity of Misuse of Funds: 

Figures: 

Figure 1: Title I Oversight Mechanisms: 

Figure 2: Title I Funds as a Proportion of Total Revenue for Selected 
Districts, 2008-2009 School Year: 

Figure 3: Salaries and Benefits as a Percentage of Title I 
Expenditures in Selected Districts, 2008-2009 School Year: 

Figure 4: Percentage of Title I Staff by Category in Selected 
Districts, 2008-2009 School Year: 

Figure 5: Purchased Services as a Percentage of Total Title I 
Expenditures in Selected Districts, 2008-2009 School Year: 

Figure 6: Materials and Supplies as a Percentage of Total Title I 
Expenditures in Selected Districts, 2008-2009 School Year: 

Figure 7: Indirect Administrative Costs as a Percentage of Title I 
Expenditures in Selected Districts, 2008-2009 School Year: 

Abbreviations: 

Education: U.S. Department of Education 

ESEA: Elementary and Secondary Education Act of 1965 

FTE: full-time equivalent 

OIG: Office of Inspector General 

OMB: Office of Management and Budget: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

July 15, 2011: 

The Honorable Tom Harkin: 
Chairman: 
The Honorable Michael B. Enzi: 
Ranking Member: 
Committee on Health, Education, Labor, and Pensions: 
United States Senate: 

The Honorable John P. Kline: 
Chairman: 
The Honorable George Miller: 
Ranking Member: 
Committee on Education and the Workforce: 
House of Representatives: 

Title I of the Elementary and Secondary Education Act of 1965 (ESEA), 
as amended, provides flexible funding to state and local educational 
agencies to expand and improve educational programs in schools with 
high concentrations of students from low-income families.[Footnote 1] 
Title I funds may be used to provide additional instructional staff, 
professional development for instructional staff and administrators, 
after-school programs, and other strategies for raising student 
achievement. Congress appropriated $14.5 billion in fiscal year 2010 
for Title I grants to school districts, making Title I the largest 
federal funding source for kindergarten through grade 12 education, 
and. Under the American Recovery and Reinvestment Act of 2009, an 
additional $10 billion was provided to school districts for Title I 
programs for use through fiscal year 2010.[Footnote 2] ESEA, as 
amended in 2001, included a mandate that requires us to identify how 
school districts expend Title I funds, including the extent to which 
funds were expended on academic instruction.[Footnote 3] In 2003, we 
reported on this issue pursuant to the mandate.[Footnote 4] At that 
time, we found that selected districts spent at least 84 percent of 
their Title I funds on activities related to instruction. As Congress 
plans for the reauthorization of ESEA, interest remains in better 
understanding how these funds are spent and how much federal education 
funding reaches the classroom. To respond to this mandate and the 
continued interest in Title I expenditures, we determined (1) how 
selected school districts spent their Title I funds, and (2) what 
federal mechanisms are in place to oversee how Title I funds are used, 
and what is known about the extent of noncompliance with relevant 
requirements. 

To determine how selected districts used Title I funds, we selected 
and visited three school districts in each of four states--Louisiana, 
Ohio, Rhode Island, and Washington. Combined, these 12 districts 
comprise 463 schools serving more than 230,000 students. We selected 
these states and districts based on the characteristics described in 
the mandate, including variation in size, student demographics, 
economic conditions, and geographic locations. We reviewed Title I 
plans, audits, and budget and expenditure reports that detailed 
district uses of Title I funds, and conducted semi-structured 
interviews with state and district officials to better understand 
these uses. Districts tended to use a consistent set of categories to 
describe expenditures on items, such as salaries, benefits, supplies, 
and services. We were generally able to ascertain what proportions of 
staff (almost always the largest category of expenditures funded by 
Title I) were in administrative, instructional, and instructional 
support positions; however, districts did not consistently classify 
all types of expenditures in a way that always allowed us to ascertain 
their purpose--for example, instructional versus noninstructional. 
Although we were not able to directly compare all instructional versus 
noninstructional expenditures for all districts, our comparison of the 
proportion of staff funded by Title I in each category accounted for a 
substantial portion of districts' expenditures and allowed us to draw 
conclusions for the selected districts. We assessed the reliability of 
the expenditure data provided to us by the districts by (1) reviewing 
data for obvious inconsistencies, errors, and completeness; (2) 
comparing it with other available expenditure data to determine data 
consistency and reasonableness; (3) interviewing district Title I and 
financial officials about expenditure data quality control procedures; 
and (4) selecting transactions in varied expenditure categories and 
reviewing documentation for those transactions to determine whether 
the amount and expenditure category were accurate. We determined that 
the expenditure amounts and object categories were sufficiently 
reliable for our purposes of describing the nature of district Title I 
expenditures and making broad comparisons of districts' expenditures. 
Due to the limited number of districts selected, our findings cannot 
be generalized to school districts nationwide. However, we conducted a 
literature review to determine what researchers have found regarding 
how Title I funds are spent nationwide. In addition to studies 
identified in our 2003 report, we identified one additional study that 
met our criteria. We also analyzed relevant federal laws, regulations, 
and guidance related to Title I spending. 

To determine what is known about the extent of noncompliance with 
requirements related to Title I spending, we reviewed the findings 
from various oversight mechanisms that have examined Title I spending, 
namely those described in 2009 Department of Education (Education) 
monitoring reports, audit reports issued by Education's Office of the 
Inspector General (OIG), and fiscal year 2009 single audit reports for 
school districts. To describe the results of single audits, we 
analyzed selected data that were reported to the Federal Audit 
Clearinghouse by school districts. [Footnote 5] We assessed the 
reliability of the Federal Audit Clearinghouse data on single audits 
by (1) performing electronic testing of required data elements, (2) 
reviewing existing information about the data and systems that 
produced them, and (3) interviewing U.S. Census Bureau officials 
knowledgeable about the database. We determined that these data were 
sufficiently reliable for the purpose of presenting descriptive 
analysis of single audits of school districts. However, because not 
all districts are required to submit reports and some that are 
required to do so may not, our findings describe those districts that 
have submitted reports and are not generalizable to districts 
nationwide. For more information on our scope and methodology, see 
appendix I. 

We conducted this performance audit from May 2010 through June 2011 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

Educational Expenditures: 

School districts receive funding from a variety of sources, including 
local, state, and federal governments. Title I funds, received by more 
than 90 percent of the nation's school districts and more than 55 
percent of all public schools, make up a small portion of most 
districts' overall funding.[Footnote 6] Specifically, in fiscal year 
2008, the most recent year for which data were available, about 8 
percent of districts' funding came from federal programs and about 2 
percent of districts' funding came from Title I, which is generally 
the largest of the federal funding sources for kindergarten through 
grade 12. In individual districts, the share of funding from Title I 
ranged from zero to 36 percent in 2008. Generally, Title I allocations 
to districts are based on the district's size and percentage of 
students from low-income families, as well as the population of the 
district's state and how much that state spends per pupil on 
education.[Footnote 7] 

The National Center for Education Statistics reports information about 
school district expenditures based on data collected by the U.S. 
Census Bureau.[Footnote 8] These data include information on how much 
districts spend for particular activities, such as instruction, 
administration, and instructional support. They also include 
information on the types of goods and services purchased, such as 
salaries, benefits, and equipment. However, they do not indicate which 
funding sources (such as Title I) these expenditures are made from. 
According to data reported by the National Center for Education 
Statistics for 2007-2008, 61 percent of total school district 
expenditures (from all revenue sources) were for instruction.[Footnote 
9] 

Requirements: 

Title I funds are awarded to states, which distribute the vast 
majority of them for use by school districts, and Title I does not 
describe allowable uses of funds for specific goods or services. To 
provide for local flexibility in determining how to use funds, ESEA 
requires districts to measure academic outcomes and achieve 
benchmarks, but does not generally dictate how funds are to be spent. 
[Footnote 10] Title I funds are intended for instruction and other 
supportive services for disadvantaged children so that they can master 
challenging curricula and meet state standards in core academic 
subjects. Title I does not include a definition of costs related to 
instruction, or costs unrelated to instruction that school districts 
must use. While Education has issued guidance on Title I, it has not 
prescribed specific uses of Title I funds. According to Education 
officials, the agency is reluctant to endorse spending on any 
particular good or service, as Education wants to allow schools to 
spend the money to meet their unique needs and to be free to spend the 
money creatively. 

Schools may run two types of Title I programs--targeted and 
schoolwide. Schools where more than 40 percent of students are from 
low-income families may operate schoolwide programs, enabling them to 
serve all children at the school with Title I funds. In targeted-
assistance schools, Title I funds may only be used to benefit children 
who are determined to be eligible by being identified as failing, or 
most at risk of failing, to meet the state's student academic 
achievement standards. Schoolwide programs offer schools more 
flexibility than targeted programs in using Title I funds because they 
may use these funds to support all students, regardless of students' 
Title I eligibility, and to fund a comprehensive school plan to 
upgrade all the instruction in a school.[Footnote 11] Schoolwide 
programs also offer additional fiscal flexibility when schools combine 
separate program resources into a single accounting fund. The 
schoolwide model has become the dominant model as schools have opted 
to take advantage of the flexibility to serve all students. However, 
schools and districts are still responsible for maintaining 
appropriate internal controls over all federal education funds. 

While Title I is a flexible funding source, ESEA contains some 
provisions requiring a minimum percentage or limiting the maximum 
percentage of funds that can be used for specific purposes. For 
example, the law requires that, generally, a state spend no more than 
1 percent on administration.[Footnote 12] States are required to 
reserve 4 percent of Title I funds to provide school districts with 
funds for school improvement activities, unless this amount would 
reduce school districts' Title I grant below the amount received in 
the prior year.[Footnote 13] States may also reserve up to 5 percent 
of Title I funds in excess of the state's previous year allocation for 
academic achievement awards to schools.[Footnote 14] Similarly, the 
law requires that school districts in need of improvement reserve at 
least 10 percent of Title I funds for teacher professional 
development.[Footnote 15] School districts with schools in need of 
improvement must also spend specific percentages of Title I funds to 
provide student transportation to support public school choice and 
supplemental educational services to students in those schools. 
[Footnote 16] 

Among other provisions, the law also contains several fiscal 
requirements, including a maintenance of effort requirement that 
districts' state and local funding levels not decrease by more than 10 
percent in any year; a stipulation that Title I funds be used to 
supplement, not supplant, state and local funds; and a requirement 
that state and local funds be used to provide comparable services to 
schools receiving funds and those not receiving funds.[Footnote 17] 

While ESEA limits the percentage of Title I funds that states may use 
for administrative purposes, it does not limit the amount that school 
districts may use. We noted in our 2003 report that there is no 
specific definition of administrative activities for Title I and that 
Education's general administrative regulations and guidance address 
the issue of how grantees should identify administrative costs. 
Education's general administrative regulations state that 
"administrative requirements mean those matters common to grants in 
general, such as financial management, kinds and frequency of reports, 
and retention of records."[Footnote 18] In 1998, Education issued a 
report entitled The Use of Federal Education Funds for Administrative 
Costs, which discussed various definitions of administrative costs and 
activities in common use. Guidance issued by Education on what 
constitutes administrative costs states that "[t]he costs of 
administration are those portions of reasonable, necessary and 
allowable costs associated with the overall project management and 
administration. These costs can be both personnel and nonpersonnel 
costs and both direct and indirect."[Footnote 19] The guidance 
provides a list of examples of direct administrative costs such as the 
salaries, benefits, and other expenses of staff that perform overall 
program management, program coordination, and office management 
functions. 

Indirect costs represent the expenses that are not readily identified 
with a particular grant function or activity, but are necessary for 
the general operation of the district and the conduct of activities it 
performs. An indirect cost rate is a mechanism for determining what 
proportions of a district's overall administration costs each program 
should bear and is expressed as a percentage of some or all of the 
direct cost items in the district's budget.[Footnote 20] For example, 
the costs involved with providing office space, financial services, or 
general payroll services to officials who administer Title I grants 
cannot be directly allocated to the grant because these services are 
provided to a large number of people. The indirect cost rate, which is 
approved by the state, accounts for these types of expenses. 

Oversight: 

Figure 1: Title I Oversight Mechanisms: 

[Refer to PDF for image: illustration] 

Department of Education: 
* OIG audits selected states and districts using risk-based criteria. 
* Monitors oversight of Title I programs with State educational 
agencies. 

State educational agency: 
* Monitors compliance with Title I regulations in School Districts. 

Auditors: 
* Annual single audit of State educational agencies. 

Contracted auditors: 
* Annual single audit of School Districts. 

Source: GAO analysis of Title I oversight structure. 

[End of figure] 

School districts have flexibility in how they use Title I funds, and 
there are a variety of federal oversight mechanisms in place to help 
ensure that the funds are used in a manner that is consistent with the 
relevant requirements of Title I, as shown in figure 1. Education 
monitors how state educational agencies (states), which receive Title 
I grants from Education and distribute funds to school districts, 
implement and administer the Title I program within the state. During 
these reviews, Education evaluates state Title I monitoring procedures 
to determine whether states ensure that school districts comply with 
program requirements. Such requirements include reserving funds for 
required set-asides, ensuring that Title I funds do not supplant state 
and local funds, and distributing Title I funds to school attendance 
areas and schools in rank order, based on the number of low-income 
students residing in the attendance area or attending the school. 
[Footnote 21] States are responsible for monitoring school districts 
to help to ensure their compliance with Title I program requirements. 
Education's OIG also carries out an important Title I oversight 
function. It audits and investigates selected states and school 
districts; identifies cases of fraud, waste, and abuse; and recommends 
the return of Title I funds in some cases. 

Further oversight of Title I grantees and subgrantees is carried out 
through audits of states, local governments, and nonprofit entities 
that expend at least $500,000 per year in federal awards, including 
grants and other assistance, as required by the Single Audit Act. 
These audits are commonly called "single audits."[Footnote 22] Single 
audits are carried out by independent nonfederal auditors who are 
generally contracted for this purpose by the auditee. These audits 
cover both the entity's financial statements and spending of federal 
grant awards for each program that the auditor has designated as a 
major program. Auditors determine whether the audited entity met the 
compliance requirements listed in the Office of Management and 
Budget's (OMB) Circular No. A-133 Compliance Supplement for each major 
program. There are 14 types of compliance requirements which include 
allowable costs/cost principles, eligibility, and cash management. The 
auditor considers the applicability of the requirements to each major 
program and performs tests and other audit procedures where 
appropriate. Auditors also report on the entity's internal control 
over compliance for each major program[Footnote 23] and report any 
deficiencies or related findings of noncompliance in the single audit 
report. Auditors designate deficiencies in internal control as 
material weaknesses if they are serious enough to indicate a 
reasonable likelihood that material noncompliance may not be 
prevented, detected, or corrected in a timely manner. It is the 
auditees' responsibility to follow-up and take corrective actions on 
the audit findings. Auditors also must follow-up on findings from past 
years' audits, as reported to them by the auditee. 

Selected School Districts Used Funds to Support a Variety of 
Initiatives, Primarily Related to Instruction, to Improve Student 
Outcomes: 

District Title I Initiatives Were Generally Targeted at the Elementary 
Level and Included Reducing Class Sizes and Extending Instructional 
Time: 

The 12 selected school districts we visited used Title I funds for 
activities intended to improve academic outcomes for low-income 
students, primarily in elementary school, through a variety of 
initiatives, such as reducing class sizes and expanding instructional 
hours. As seen in figure 2, these funds represented a relatively small 
proportion of total revenues in our selected districts, from less than 
1 to more than 8 percent. However, Title I funds may be used in 
conjunction with local, state, or other federal funding sources to 
support larger initiatives than Title I funds alone could support. For 
example, Title I funds could be used along with ESEA Title II 
(Improving Teacher Quality State Grants) funds to support a literacy 
program or to support a supplemental component, such as small group 
instruction, of a larger state-funded or locally funded literacy 
initiative.[Footnote 24] In this case, the Title II funds might be 
used to provide professional development to teachers in the literacy 
program, and Title I might be used to hire teachers for small group 
instruction. 

Figure 2: Title I Funds as a Proportion of Total Revenue for Selected 
Districts, 2008-2009 School Year: 

[Refer to PDF for image: horizontal bar graph] 

State: Louisiana; 

District: Orleans; 
Percentage of total budget: 7.5%. 

District: St. Tammany; 
Percentage of total budget: 1.4%. 

District: Iberia; 
Percentage of total budget: 3.2%. 

State: Ohio; 

District: Cleveland; 
Percentage of total budget: 8.1%. 

District: Lakewood City; 
Percentage of total budget: 3.0%. 

District: Southeast Local (Wayne County); 
Percentage of total budget: 6.8%. 

State: Rhode Island; 

District: Providence; 
Percentage of total budget: 6.5%. 

District: Cranston; 
Percentage of total budget: 1.7%. 

District: Scituate; 
Percentage of total budget: 0.8%. 

State: Washington; 

District: Seattle; 
Percentage of total budget: 2.5%. 

District: North Thurston; 
Percentage of total budget: 1.3%. 

District: Puyallup; 
Percentage of total budget: 0.8%. 

Sources: GAO analysis of selected districts’ data. 

[End of figure] 

Given the relatively small proportion of funding they received from 
Title I, 8 of the 12 districts we visited chose to target Title I 
funds at the elementary grade levels, where officials said they 
believed the funds would provide the greatest improvements in academic 
achievement.[Footnote 25] This strategy is consistent with the 
findings of a study of a nationally representative sample of 300 
school districts nationwide on targeting and uses of federal education 
funds, which found that elementary schools received 76 percent of 
Title I funds allocated to schools, considerably more than their share 
of the nation's low-income students (57 percent). [Footnote 26] While 
most Title I funds are directed to elementary schools, two urban 
districts that we visited provided funds to all schools in the 
district. In one district, officials said that they began using Title 
I funds for high schools only after state funding for high poverty 
schools became unavailable.[Footnote 27] 

Nearly all of the schools in the 12 districts we visited used Title I 
funds for schoolwide programs, rather than for targeted assistance 
programs. Schoolwide programs offer flexibility by allowing schools to 
fund a comprehensive schoolwide plan to upgrade all instruction in a 
high poverty school without distinguishing between eligible and 
ineligible children and also make it easier for schools to coordinate 
the use of Title I and other funds. While schoolwide programs offer 
additional fiscal flexibility when schools combine separate program 
resources into a single accounting fund, the school districts we 
selected for review continued to track the Title I dollars to 
individual eligible activities, even as they took advantage of the 
flexibility to serve all children. In our selected districts, the 
remaining 6 percent of schools with targeted assistance programs 
tended to have lower poverty levels below or only slightly above the 
40 percent threshold required for a schoolwide program. 

The districts we visited used Title I funds in support of a variety of 
initiatives. Funds were used to reduce teacher/student ratios and 
extend instructional time. Our reviews of Title I grant applications 
and interviews with district officials indicated that 10 districts 
used funds to pay for additional teachers and teachers' aides or 
assistants (paraprofessionals) during the regular school day as a way 
to reduce class sizes in Title I schoolwide programs, provide 
supplemental instruction to small groups of Title I eligible students 
in targeted assistance schools, or provide additional attention to 
students within a classroom, among other things. Furthermore, eight 
districts used Title I funds to extend the time that students spend in 
the classroom through after school and summer school programs. Title I 
funds supported these initiatives in a variety of ways, including 
paying for teachers' time, instructional materials, and student 
transportation to and from the program. 

Of the 12 districts we visited, 10 used at least some portion of their 
Title I funds to provide for the professional development of their 
teachers, including districts that were required to spend not less 
than 10 percent of Title I funds for this purpose as a result of being 
designated a district in need of improvement.[Footnote 28] 
Professional development included traditional classroom or workshop 
training as well as the use of math and literacy coaches to help 
teachers implement training they received in the classroom. Such 
coaches develop lesson plans and model the use of the lesson plan. 
They observe teachers in the classroom and provide feedback and 
coaching. Title I funds were used to purchase training services, hire 
substitutes for teachers' time spent in training, pay for attendance 
at workshops or conferences, and pay the salaries and benefits of math 
and literacy coaches. 

Several selected districts used funds to purchase technology for the 
classroom to assess student progress, to provide differentiated 
learning experiences to students at various levels of achievement, or 
improve the learning experience. Software purchases included both 
assessment software as well as math and literacy software. For 
example, districts purchased software that could produce reading 
materials that contained similar content at different reading levels. 
Others purchased software that assessed student reading levels and 
provided lessons that could be adjusted based on reading levels. 
Several districts used Title I funds to purchase hardware for 
classrooms including computers, printers, and large screen displays. 
Districts also purchased tools such as interactive whiteboards that 
allow teachers and students to project computer images and interface 
with the technology at the board, voting devices that allow a teacher 
to gauge student comprehension instantaneously, and document cameras 
that allow teachers to project a photo of a scientific specimen or 
share a document for a lesson. 

Districts Generally Spent Most Title I Funds on Personnel, but Some 
Spent More on Purchased Services than Others Due to Title I 
Requirements: 

In the 12 districts we visited, which generally pursued personnel- 
intensive strategies to improve academic outcomes, we found that 
salaries and benefits, when combined, were the largest category of 
Title I expenditures. In all but two districts, Providence and Orleans 
Parish,[Footnote 29] salaries and benefits made up at least 70 percent 
of Title I expenditures, (see figure 3.) This finding is generally 
consistent with findings of the Educational Research Service, which 
found that districts spend about 80 percent of all funds on salaries 
and benefits.[Footnote 30] For more detailed profiles of Title I 
spending in the districts we visited, see appendix II. 

Figure 3: Salaries and Benefits as a Percentage of Title I 
Expenditures in Selected Districts, 2008-2009 School Year: 

[Refer to PDF for image: horizontal bar graph] 

Average for all 12 districts: 
Salaries: 51%; 
Benefits: 16%; 
Other Title I expenditures: 33%. 

State: Louisiana; 

District: Orleans; 
Salaries: 28%; 
Benefits: 7%; 
Other Title I expenditures: 65%. 

District: St. Tammany; 
Salaries: 57%; 
Benefits: 15%; 
Other Title I expenditures: 28%. 

District: Iberia; 
Salaries: 66%; 
Benefits: 15%; 
Other Title I expenditures: 18%. 

State: Ohio; 

District: Cleveland; 
Salaries: 62%; 
Benefits: 19%; 
Other Title I expenditures: 18%. 

District: Lakewood City; 
Salaries: 80%; 
Benefits: 17%; 
Other Title I expenditures: 3%. 

District: Southeast Local (Wayne County); 
Salaries: 71%; 
Benefits: 27%; 
Other Title I expenditures: 2%. 

State: Rhode Island; 

District: Providence; 
Salaries: 40%; 
Benefits: 18%; 
Other Title I expenditures: 42%. 

District: Cranston; 
Salaries: 68%; 
Benefits: 24%; 
Other Title I expenditures: 8%. 

District: Scituate; 
Salaries: 75%; 
Benefits: 25%; 
Other Title I expenditures: 0%. 

State: Washington; 

District: Seattle; 
Salaries: 58%; 
Benefits: 19%; 
Other Title I expenditures: 23%. 

District: North Thurston; 
Salaries: 68%; 
Benefits: 23%; 
Other Title I expenditures: 9%. 

District: Puyallup; 
Salaries: 70%; 
Benefits: 23%; 
Other Title I expenditures: 8%. 

Sources: GAO analysis of selected districts’ data. 

Note: Some numbers may not add to 100 percent due to rounding. 

[End of figure] 

In the 12 selected districts, we found that from 65 to 100 percent of 
full-time equivalents (FTE) whose salaries were paid for with Title I 
funds were instructional staff, including teachers and 
paraprofessionals such as teachers' aides.[Footnote 31] Of the more 
than 1,300 FTEs whose salaries and benefits were paid for with Title I 
funds in the 12 districts we visited, 82 percent were instructional 
personnel (see figure 4). Education's 2009 study on targeting and uses 
of Title I and other federal funds found that, at the individual 
school level, about 88 percent of personnel expenditures were used to 
pay for teachers and paraprofessionals.[Footnote 32] The study also 
found that the highest poverty schools spent a lower percentage of 
Title I funds on instructional staff and a higher percentage on 
instructional support staff, such as instructional coaches, 
librarians, or social workers, than the lowest poverty schools did. 

While a large portion of Title I FTEs were instructional personnel, 
the types of instructional personnel varied by district, with some 
districts paying only or primarily teachers and others paying 
primarily paraprofessionals or teachers' aides. On average, the 12 
selected districts used Title I funds to pay about 2.3 teachers for 
every teacher's aide. Education's recent study found that Title I 
funds were increasingly used to pay for teachers rather than 
paraprofessionals, such as teachers' aides.[Footnote 33] From the 1997-
1998 school year to the 2004-2005 school year, measured in FTEs, the 
total number of Title I staff increased by 49 percent whereas the 
number of Title I teachers' aides declined by 10 percent. The 
proportion of teachers' aides among Title I school staff declined from 
47 to 35 percent, whereas the share of teachers rose from 45 to 55 
percent during the same period. 

In seven of the school districts we visited, Title I funds were also 
used to pay for various instructional support personnel. Instructional 
support personnel accounted for 10 percent of FTEs paid with Title I 
funds in the 12 districts we visited. These personnel included 
instructional coaches, who coached teachers of Title I students; 
librarians to provide additional literacy support for students in 
schoolwide programs that were not meeting standards in reading; and 
counselors to support students who were not meeting standards and 
their families by providing academic support and information about 
academic requirements. Similarly, Education's study found that about 7 
percent of Title I funds spent on personnel at the school level were 
spent on instructional support staff. 

Some personnel costs paid for with Title I funds were administrative 
personnel, such as Title I directors or coordinators and 
administrative assistants.[Footnote 34] The percentage of FTEs charged 
to Title I that were administrative varied from 0 to 15 percent and 
accounted for 8 percent of all Title I personnel in the school 
districts we visited. In a few school districts we visited, 
administrative personnel also included personnel who supported 
parental involvement activities. On the other hand, one district opted 
not to charge Title I for any of its administrative costs. Larger 
districts with greater levels of Title I funds and more schools in 
need of improvement had more personnel dedicated to overseeing the use 
of Title I funds. Education's study found that 5 percent of Title I 
funds spent on personnel at the school level were spent on 
administrative personnel. 

Figure 4: Percentage of Title I Staff by Category in Selected 
Districts, 2008-2009 School Year: 

[Refer to PDF for image: horizontal bar graph] 

Average for all 12 districts: 
Teaching: 82%; 
Instructional support: 10%; 
Administrative: 8%. 

State: Louisiana; 

District: Orleans; 
Teaching: 97%; 
Instructional support: 0%; 
Administrative: 3%. 

District: St. Tammany; 
Teaching: 87%; 
Instructional support: 2%; 
Administrative: 11%. 

District: Iberia; 
Teaching: 82%; 
Instructional support: 5%; 
Administrative: 13%. 

State: Ohio; 

District: Cleveland; 
Teaching: 78%; 
Instructional support: 11%; 
Administrative: 11%. 

District: Lakewood City; 
Teaching: 85%; 
Instructional support: 5%; 
Administrative: 10%. 

District: Southeast Local (Wayne County); 
Teaching: 95%; 
Instructional support: 0%; 
Administrative: 5%. 

State: Rhode Island; 

District: Providence; 
Teaching: 65%; 
Instructional support: 20%; 
Administrative: 15%. 

District: Cranston; 
Teaching: 98%; 
Instructional support: 0%; 
Administrative: 2%. 

District: Scituate; 
Teaching: 100%; 
Instructional support: 0%; 
Administrative: 0%. 

State: Washington; 

District: Seattle; 
Teaching: 73%; 
Instructional support: 24%; 
Administrative: 4%. 

District: North Thurston; 
Teaching: 98%; 
Instructional support: 2%; 
Administrative: 0%. 

District: Puyallup; 
Teaching: 98%; 
Instructional support: 2%; 
Administrative: 0%. 

Sources: GAO analysis of selected districts’ data. 

Note: Some numbers may not add to 100 percent due to rounding. 

[End of figure] 

Prior studies have also found that more than 80 percent of Title I 
funds are spent or budgeted for instruction-related (versus 
administrative) purposes. Although we were not able to compare the 
percentage of all expenditures selected districts made in the 
instructional, instructional support, and administration categories, 
Education's study of Title I budget and expenditures found that, on 
average, districts expended 10 percent of Title I funds for 
administrative costs.[Footnote 35] It also found that more than 70 
percent of Title I funds were spent on instruction, primarily for 
salaries and benefits for instructors, but also including some 
instructional materials and equipment. The same study found that less 
than 20 percent of funds were used for instructional support, which 
includes professional development, student support, in addition to 
instructional support personnel. In our 2003 report on Title I 
spending by school districts, which focused on selected districts 
using a common financial system, we reported that the 6 selected 
districts we reviewed spent 0 to 13 percent of Title I funds on 
administration and that each district spent at least 84 percent of 
Title I funds on activities related to instruction.[Footnote 36] In 
addition, we identified several studies that had focused on the use of 
Title I funds for administrative purposes and had generally found that 
districts spent 4 to 10 percent of Title I funds on administrative 
activities, but definitions of administrative expenditures varied. 
[Footnote 37] 

Title I requirements appeared to drive increased spending on purchased 
services by larger districts. The larger, more urban school districts 
we visited, which also had larger percentages of schools in need of 
improvement, spent substantially more of their Title I funds on 
purchased or contracted services than other districts, due to 
requirements that they provide supplemental educational services and 
transportation for school choice and spend a certain percentage on 
professional development.[Footnote 38] As shown in figure 5, 8 of the 
12 districts spent less than 5 percent on services, while the other 4 
urban districts spent 9 to 28 percent on services.[Footnote 39] 
Purchased services accounted for 17 percent of all Title I 
expenditures in the districts we visited. Three of the four districts 
that spent 9 to 28 percent on services had 23 to 72 percent of their 
schools in need of improvement. The eight remaining districts spent 0 
to 5 percent of their Title I funds on services, and had 0 to 11 
percent of their schools designated as in need of improvement. Service 
expenditures for the larger, urban districts included payments to 
vendors chosen by parents to provide supplemental educational services 
and consultants to assist schools with activities such as curriculum 
development and redesign or to provide professional development for 
teachers. The smaller districts with few or no schools in need of 
improvement had service expenditures for other types of services, such 
as license agreements for software. 

Figure 5: Purchased Services as a Percentage of Total Title I 
Expenditures in Selected Districts, 2008-2009 School Year: 

[Refer to PDF for image: horizontal bar graph] 

Average for all 12 districts: 17%. 

State: Louisiana; 

District: Orleans; 
Percentage of total budget: 28%. 

District: St. Tammany; 
Percentage of total budget: 3%. 

District: Iberia; 
Percentage of total budget: 5%. 

State: Ohio; 

District: Cleveland; 
Percentage of total budget: 14%. 

District: Lakewood City; 
Percentage of total budget: 1%. 

District: Southeast Local (Wayne County); 
Percentage of total budget: 1%. 

State: Rhode Island; 

District: Providence; 
Percentage of total budget: 27%. 

District: Cranston; 
Percentage of total budget: 1%. 

District: Scituate; 
Percentage of total budget: 0%. 

State: Washington; 

District: Seattle; 
Percentage of total budget: 9%. 

District: North Thurston; 
Percentage of total budget: 2%. 

District: Puyallup; 
Percentage of total budget: 1%. 

Sources: GAO analysis of selected districts’ data. 

[End of figure] 

Materials and supplies, including instructional materials, made up 0 
to 20 percent of Title I expenditures in the school districts we 
visited and averaged 9 percent for all districts we visited (see 
figure 6). Material and supply expenditures included supplementary 
reading kits; supplementary work books; office supplies; and food and 
publicity for parent involvement activities.[Footnote 40] 

Figure 6: Materials and Supplies as a Percentage of Total Title I 
Expenditures in Selected Districts, 2008-2009 School Year: 

[Refer to PDF for image: horizontal bar graph] 

Average for all 12 districts: 9%. 

State: Louisiana; 

District: Orleans; 
Percentage of total budget: 19%. 

District: St. Tammany; 
Percentage of total budget: 20%. 

District: Iberia; 
Percentage of total budget: 10%. 

State: Ohio; 

District: Cleveland; 
Percentage of total budget: 3%. 

District: Lakewood City; 
Percentage of total budget: 2%. 

District: Southeast Local (Wayne County); 
Percentage of total budget: 0%. 

State: Rhode Island; 

District: Providence; 
Percentage of total budget: 9%. 

District: Cranston; 
Percentage of total budget: 2%. 

District: Scituate; 
Percentage of total budget: 0%. 

State: Washington; 

District: Seattle; 
Percentage of total budget: 10%. 

District: North Thurston; 
Percentage of total budget: 2%. 

District: Puyallup; 
Percentage of total budget: 2%. 

Sources: GAO analysis of selected districts’ data. 

[End of figure] 

Seven of the districts we visited spent Title I funds on equipment. 
The most spent in any district on this category of expenditures was 
just less than 6 percent ($1.8 million) of their Title I funds. On 
average, this category of expenditures accounted for 2 percent of all 
Title I expenditures in the 12 school districts we visited. In those 
districts that had expenditures in this category, the expenditures 
were generally for computer and other electronic equipment. Some 
school districts classified all electronic equipment as equipment, 
property, or capital purchases, while other districts distinguished 
between types of equipment based on dollar value or susceptibility to 
theft. For example, a laptop computer costing $800 might be considered 
a supply, but a mobile docking module costing $6,600 that allows a 
teacher to transport all necessary computer equipment from room to 
room could be considered equipment or property.[Footnote 41] 

In addition to the expenditures directly attributable to the Title I 
program, the 12 selected districts charged 0 to 12 percent of their 
Title I grant to indirect administrative costs (see figure 7). On 
average, about 4 percent of Title I expenditures in the districts we 
visited were for indirect administrative costs. Several small 
districts with small grants chose not to charge an indirect cost rate 
to their Title I grants. 

Figure 7: Indirect Administrative Costs as a Percentage of Title I 
Expenditures in Selected Districts, 2008-2009 School Year: 

[Refer to PDF for image: horizontal bar graph] 

Average for all 12 districts: 4%. 

State: Louisiana; 

District: Orleans; 
Percentage of total budget: 12%. 

District: St. Tammany; 
Percentage of total budget: 5%. 

District: Iberia; 
Percentage of total budget: 4%. 

State: Ohio; 

District: Cleveland; 
Percentage of total budget: 1%. 

District: Lakewood City; 
Percentage of total budget: 0%. 

District: Southeast Local (Wayne County); 
Percentage of total budget: 0%. 

State: Rhode Island; 

District: Providence; 
Percentage of total budget: 3%. 

District: Cranston; 
Percentage of total budget: 2%. 

District: Scituate; 
Percentage of total budget: 0%. 

State: Washington; 

District: Seattle; 
Percentage of total budget: 4%. 

District: North Thurston; 
Percentage of total budget: 3%. 

District: Puyallup; 
Percentage of total budget: 4%. 

Sources: GAO analysis of selected districts’ data. 

[End of figure] 

As part of the budgeting process, school districts submitted detailed 
budgets to state educational agencies that included amounts set aside 
or reserved from the Title I grant for specific uses by the district, 
including district-managed services, such as professional development. 
Some of these reservations are mandatory, and others are optional. 
Each state had different categories of optional reservations or set-
asides. Optional set-asides included funds for administration or 
summer school. 

The five selected districts we visited that reserved funds for 
supplemental educational services and transportation set aside 4 to 18 
percent of their Title I funds for those purposes. While the districts 
we visited with schools in need of improvement typically set aside 
larger amounts for supplementary educational services, transportation 
to support school choice was typically not a large budget item. In two 
cases, this was because the district provided choice and 
transportation to all students regardless of their schools' 
performance, and paid for this with local funds. In one district, the 
number of students opting to transfer to a different school was 
relatively small. 

Total mandatory and optional amounts set aside, including amounts for 
district-managed services such as administration, professional 
development, or supplemental educational services, accounted for 0.1 
to 68 percent of Title I funds in the districts we visited.[Footnote 
42] In a few of the larger districts we visited, the total mandatory 
and optional amounts set aside exceeded 50 percent of the Title I 
grant. Mandatory set-asides alone amounted to as much as 28 percent in 
two districts. This is consistent with the findings of Education's 
study, which reported that from the 1997-1998 school year to the 2004-
2005 school year, the share of Title I funds allocated to individual 
schools declined from 83 to 74 percent, while the share used for 
district-managed services rose from 9 to 21 percent. 

Various Title I Oversight Mechanisms Exist, But Are Not Designed to 
Yield Estimates of the Full Scope of Spending Noncompliance: 

Title I recipients are subject to various oversight mechanisms, which 
provide some information on noncompliance with relevant spending 
requirements, but are not designed to provide estimates of the 
prevalence of noncompliance with requirements regarding use of funds. 
Table 1 summarizes the strengths and limitations of these oversight 
mechanisms for this purpose, along with further information. 

Table 1: Strengths and Limitations of Using Title I Oversight 
Mechanisms to Assess Extent or Severity of Misuse of Funds: 

Mechanism: Education monitoring; 
Purpose: Monitor state implementation of Title I and extent to which 
states ensure district and school compliance with program requirements; 
Coverage of school districts: Two to three selected school districts 
per state, primarily for the purpose of assessing states' monitoring 
of their subgrantees; 
For purposes of assessing extent or severity of misuse of funds: 
Strengths: Covers a broad array of specific compliance issues at the 
state level and assesses state oversight of district and school 
compliance; 
Limitations: Not designed to capture all noncompliance with spending 
requirements. Many of the requirements are related to nonfiscal 
programmatic issues. Monitoring does not include detailed reviews of 
Title I expenditures. 

Mechanism: Audits by Education's OIG; 
Purpose: Audit use of funds and fiscal controls over federal funds to 
assess misuse; 
Coverage of school districts: Selected school districts using risk-
based criteria, including tips, past audit findings, and other known 
weaknesses. Audits of 49 school districts conducted from 2002 to 2009; 
For purposes of assessing extent or severity of misuse of funds: 
Strengths: Provides in-depth financial reviews and comprehensive 
review of districts' controls over Title I funds; 
Limitations: Conducted in a limited number of districts not selected 
to represent Title I recipients at large. 

Mechanism: Single Audit; 
Purpose: Audit financial statements and compliance with federal 
program requirements for certain programs among recipients of federal 
funds; 
Coverage of school districts: Entities, such as school districts, 
spending at least $500,000 in federal funds are required to obtain a 
single audit and submit the audit to the Federal Audit Clearinghouse 
annually; 
For purposes of assessing extent or severity of misuse of funds: 
Strengths: In fiscal year 2009, single audit reports were submitted to 
the Federal Audit Clearinghouse for nearly 9,000 school districts that 
spent $11.8 billion in Title I funds; 
Limitations: Coverage excludes districts receiving smaller amounts of 
federal funds and, in some years, districts that do not file annually. 
Title I was determined to be a major program, and auditors tested for 
compliance with the requirements applicable to Title I grants in about 
4,000 covered districts that filed single audits in fiscal year 2009. 

Source: GAO analysis of oversight mechanisms. 

[End of table] 

Education Monitoring of State Title I Program Implementation: 

Education monitors how well states ensure school district compliance 
with Title I requirements; however, this monitoring is not designed to 
capture all district noncompliance with spending requirements. 
Education generally monitors state implementation of the Title I 
program and evaluates the extent to which states ensure district and 
school compliance with a broad array of Title I requirements.[Footnote 
43] As a part of its assessment of state oversight of districts and 
schools, Education reviews Title I compliance in two to three school 
districts in each state being reviewed. Some Title I requirements 
reviewed by Education relate to how Title I funds are spent. However, 
many other requirements deal with nonfiscal programmatic issues. While 
ensuring compliance with Title I spending requirements plays a part in 
Education's monitoring strategy, officials we spoke with cautioned 
that monitoring is not designed to capture all instances of 
noncompliance. For instance, Education officials do not conduct 
detailed reviews of districts' Title I expenditures to identify 
unallowable expenses, but rely primarily on other sources of 
oversight, such as OIG audits, for this purpose. Education uses the 
results of its monitoring efforts and others' oversight efforts to 
design technical assistance and training initiatives to assist states 
and school districts in using their resources and flexibility 
appropriately. They also use results to target future monitoring 
efforts based on risk. In some cases, Education may place conditions 
on the further receipt of grant funds. 

We reviewed Education's 2009-2010 monitoring reports and other 
relevant documents for findings related to how Title I funds were 
spent in the 16 states and the District of Columbia that Education 
monitored that year. Among findings Education identified as common, 
some dealt with program compliance issues that were unrelated to how 
Title I funds were spent, such as failing to ensure that districts 
notified parents about supplemental educational services or school 
choice in a timely manner or failing to post information about school 
choice on their Web sites. Other findings were related to how Title I 
funds were spent, such as failure to ensure that school districts 
allocated funds according to Title I requirements, met various fiscal 
requirements, or used Title I funds to support only paraprofessionals 
who had the required qualifications. [Footnote 44] For instance, 
sampled districts in several states did not distribute at least 95 
percent of parental involvement funds to schools, as 
required.[Footnote 45] In other cases, states failed to ensure that 
districts accurately calculated the amount of Title I funds to reserve 
for services to participating private school students.[Footnote 46] 
There were also cases in which states did not prevent districts from 
using Title I funds to supplant state and local funds, which is 
prohibited under Title I.[Footnote 47] For example, one Arkansas 
district required its Title I schools to use Title I funds to pay for 
electricity and cleaning supplies, while other schools used nonfederal 
general funds for these items. Education required Arkansas to notify 
the district that this practice was not allowable and submit evidence 
that the district subsequently provided general funds to its Title I 
schools for these purposes. In addition, Education identified 
instances where districts paid paraprofessionals at Title I schools 
who did not meet Title I qualification requirements, indicating that 
Title I funds may have been used to support ineligible staff. For 
instance, 82 paraprofessionals in one Illinois school district did not 
have the required qualifications. The state was required to submit an 
action plan demonstrating how it would ensure that all 
paraprofessionals would meet qualification requirements prior to the 
beginning of the next school year. 

OIG Audits: 

Education's OIG also conducts audits of selected districts, using risk-
based criteria including tips, past audit findings, and other known 
weaknesses according to officials. OIG has conducted a number of 
audits examining fiscal controls over funds from the Title I program 
and other federal Education grants, and Education and OIG officials we 
spoke with concurred that these audits tend to involve more in-depth 
financial reviews than Education's monitoring activities. OIG audits 
likely provide a more comprehensive look at specific districts' 
controls over Title I funds than other oversight mechanisms; however, 
since OIG selects districts due to known risk factors, the weaknesses 
it identifies are not necessarily representative of those of Title I 
recipients at large. 

Education's OIG has identified some instances in which selected 
districts spent Title I funds for unallowable purposes, did not 
adequately document Title I expenditures, or used Title I funds to 
supplant state and local funds. OIG has also found that inadequate 
policies and procedures, including inadequate state monitoring of 
districts, are a common cause of such violations. An OIG final 
management information report released in 2009 described the results 
of 41 final audit reports with findings related to district fiscal 
controls over formula grant programs, most frequently Title I. 
[Footnote 48] OIG identified unallowable personnel costs in 8 out of 
16 audits where such costs were reviewed. OIG also identified 
unallowable nonpersonnel costs in 9 out of 20 audits where such costs 
were reviewed because they were unnecessary, unreasonable, or not in 
keeping with program purposes. As an example, OIG found in 2009 that 
the Dallas Independent School District spent about $142,000 in Title I 
funds for salaries and benefits of non-Title I employees and $17,000 
for books distributed to non-Title I schools. OIG recommended that the 
district return these funds to Education. Completion of corrective 
action to address this audit finding was pending as of May 2011. 
[Footnote 49] To address the systemic issues that OIG identified, 
Education responded that it would use the information provided in the 
management information report in the development of its technical 
assistance plan and training curricula to provide enhanced guidance to 
states and school districts. 

In other cases, OIG found that districts had inadequate documentation 
supporting Title I expenditures. For example, the school district of 
the City of Detroit was cited in 2008 for failure to maintain required 
time and effort certifications or personal activity reports for staff 
funded wholly or partially through Title I funds totaling about $48 
million.[Footnote 50] These activity reports help ensure that the 
amount of Title I funds budgeted and claimed for Title I personnel is 
accurate. OIG recommended that Education instruct the state to require 
the district to return personnel expenditures that could not be 
adequately documented, but the majority of this finding was disputed 
by the state and district because, among other reasons, they claimed 
that they provided credible after-the-fact documentation. Completion 
of corrective action to address this audit finding was pending as of 
May 2011. OIG identified other districts that used Title I funds to 
supplant regular nonfederal funds. For instance, OIG found that a 
school district in New York inappropriately reclassified about $68,000 
in textbook costs from general funds to Title I expenditures. The 
state and district agreed with OIG's recommendation to return these 
funds to Education with interest. 

Single Audits: 

Single audits, which were completed on nearly 9,000 school districts 
that spent $11.8 billion in Title I funds in fiscal year 2009, are 
another important Title I oversight mechanism, but the single audit 
requirement does not cover school districts with less than $500,000 
per year in federal expenditures.[Footnote 51] Because of the large 
number of school districts that had single audits, analyzing data on 
the audits can provide useful information about the audited school 
districts' compliance with requirements related to Title I 
expenditures. However, available summary data do not provide in-depth 
information about the nature and severity of identified weaknesses. 

Of the 8,720 school districts with Title I expenditures that submitted 
a fiscal year 2009 single audit report to the Federal Audit 
Clearinghouse, 4,005 (46 percent) of the single audits reported that 
the Title I program was a major program and were therefore tested by 
the auditors for compliance with the requirements that could have a 
direct and material effect on Title I. The auditor did not report any 
findings for 82 percent of those audits. We analyzed data on the 
remaining 737 audits to determine the type of compliance finding most 
commonly reported in the audit reports.[Footnote 52] The allowable 
costs/cost principles category of compliance requirement was cited 
most frequently. This finding occurred in about 301 (8 percent) of the 
4,005 audits that examined Title I spending, or in about 40 percent of 
the 737 single audits that resulted in one or more findings related to 
Title I. Costs charged to a project must generally be allowable under 
the terms of the grant, actually associated with the project to which 
they are charged, and reasonable. Therefore, the single audit findings 
related to allowable costs/cost principles indicate that the audited 
district did not comply with one or more of these criteria.[Footnote 
53] 

Of the 737 single audits with findings, the nature and severity of the 
findings varied. For instance, in one single audit we reviewed, one 
finding indicated the district failed to maintain time and effort 
documentation that certified that the employee worked solely on Title 
I activities for an employee that was paid out of Title I funds. Not 
maintaining appropriate records could lead to Title I funds being used 
for costs not related to the program or allowable under the terms of 
the grant. In other cases, auditors reported that some school 
districts had used Title I funds in a manner inconsistent with Title I 
requirements. For instance, auditors reported that one district did 
not meet the requirement that 100 percent of teachers of core academic 
subjects be highly qualified. The auditor found that 5 of the 33 full- 
time instructional employees were not highly qualified, and, 
therefore, the district was not in compliance with the requirement. In 
such cases, states are responsible for issuing a written evaluation of 
the audit finding that specifies the necessity for corrective action. 

Auditors also test and report on internal controls over compliance for 
major programs when performing single audits.[Footnote 54] We reviewed 
selected single audits that reported material weaknesses in internal 
controls over compliance related to Title I grants.[Footnote 55] For 
example, the auditor reported that one school district failed to 
allocate Title I funds to each participating school attendance area or 
school in rank order, based on the number of low-income children 
residing in the area or attending the school, as required by Title I. 
As a result of this material weakness, this district may have funded 
lower-poverty schools at the expense of higher-poverty schools. Of the 
8,720 single audits, about 550 (6 percent) identified a material 
weakness in internal control over compliance in at least one federal 
program examined.[Footnote 56] However, because we relied on summary 
data in our analysis, we could not determine the proportion of these 
material weaknesses specifically related to Title I, as opposed to 
other federal programs included in the audits. 

Agency Comments: 

We provided a draft copy of this report to the Secretary of Education 
for review and comment. We received technical comments and 
incorporated them where appropriate. 

We are sending copies of this report to relevant congressional 
committees, the Secretary of Education, and other interested parties. 
In addition, this report will be available at no charge on GAO's Web 
site at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-7215 or scottg@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff that made key contributions to 
this report are listed in appendix III. 

Signed by: 

George A. Scott: 
Director, Education, Workforce, and Income Security Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

To perform this work, we visited 12 school districts, 3 in each of 4 
states--Louisiana, Ohio, Rhode Island, and Washington. We selected 
states and school districts based on the characteristics described in 
the mandate, including variation in size, student demographics, 
economic conditions, and geographic locations. For instance, we first 
selected states in different regions of the country. Then, we selected 
districts that were urban, rural, and suburban, and had a mixture of 
poverty levels and demographic diversity. 

We reviewed Title I plans, audits, and budget and expenditure reports 
that detailed the use of Title I funds by selected school districts. 
Districts tended to use a consistent set of categories to describe 
what was purchased, such as expenditures for salaries, benefits, 
supplies, and services. However, selected districts did not 
consistently classify expenditures in a way that allowed us to 
ascertain their purpose (for example, instructional versus 
noninstructional). Therefore, while we were able to ascertain what 
proportions of staff funded by Title I were in administrative, 
instructional, and instructional support positions, we were not able 
to directly compare all instructional versus noninstructional 
expenditures. 

We also assessed the reliability of the expenditure data provided to 
us by the districts by (1) reviewing data for completeness and obvious 
inconsistencies, (2) comparing them with other available expenditure 
data to determine data consistency and reasonableness, (3) 
interviewing district Title I and financial officials about 
expenditure data quality control procedures, and (4) selecting 
transactions in varied expenditure categories and reviewing 
documentation for those transactions to determine whether the amount 
and expenditure category were accurately recorded. We selected a 
nongeneralizable sample of transactions from major categories, such as 
salaries, benefits, or services, to include expenditures that appeared 
typical as well as expenditures that did not appear to fit the 
category they were in. We determined that the amounts and object 
categorization of expenditures were sufficiently reliable for the 
purpose of describing the nature of district Title I expenditures and 
making broad comparisons of districts' expenditures. However, we did 
not determine whether all costs were allowable or met all 
documentation requirements. Due to the limited number of districts 
selected, our findings from these districts cannot be generalized to 
school districts nationwide. 

We conducted semi-structured interviews with state and local education 
officials to better understand and discuss their states' or districts' 
use of Title I funds. State and local education officials described 
their procedures for ensuring funds were spent appropriately, but we 
did not test these procedures. 

We analyzed relevant federal laws, regulations, and guidance related 
to spending of Title I and other Department of Education (Education) 
funds, as well as accounting methods and protocols issued by the 
states. Additionally, we conducted a literature search to determine 
what researchers have found regarding how Title I funds have been 
spent. We searched online databases, including ERIC, Dialog Databases, 
NTIS, PolicyFile, ProQuest, and Statistical Insight using keyword 
"Title I" alone and along with "spending," "expenditures," and 
"administrative" to identify references, including studies, journal 
articles, and other material, that focused on expenditure of Title I 
funds. We also searched for studies that cited studies we had 
identified in our 2003 report. Overall, we identified 99 references in 
material published from 2001 to 2010. To further winnow down the list 
of publications, we refined our search to studies that examined Title 
I expenditures for multiple districts. We were left with only one 
study that met our criteria.[Footnote 57] We also interviewed 
researchers of the identified study and Education officials to 
determine if there were other relevant studies. They did not identify 
any that described Title I expenditures. 

We reviewed findings from Education's fiscal year 2009 monitoring 
efforts, audits conducted by Education's Office of the Inspector 
General from fiscal years 2003 to 2009 that included a review of 
fiscal controls over Title I funds, and data on school district single 
audits for fiscal year 2009 to determine whether Title I funds were 
used in accordance with relevant requirements. Findings from each of 
these oversight tools provide useful information about types of 
noncompliance seen among local school districts, but it is important 
to note that they are not designed to provide estimates of the extent 
or severity of such noncompliance. 

School districts expending at least $500,000 in federal funds are 
required to obtain a single audit and file audit results with the 
Federal Audit Clearinghouse, which has been designated as the central 
collection point, repository, and distribution center for single audit 
reports and maintains a database of single audit results.[Footnote 58] 
To describe the results of single audits, we analyzed selected data 
that were reported to the Federal Audit Clearinghouse by school 
districts. We assessed the reliability of the Federal Audit 
Clearinghouse data on single audits by (1) performing electronic 
testing of required data elements, (2) reviewing existing information 
about the data and system that produced them, and (3) interviewing 
U.S. Census Bureau officials knowledgeable about the database. While 
the Federal Audit Clearinghouse conducts testing to help ensure that 
submitted data are internally consistent, and that all required data 
fields are completed, and requires that both the submitter and the 
independent auditor certify the report, it does not verify the 
accuracy of reported data or that all entities required to report data 
do so. It is, therefore, important to note that many school districts 
are not required to obtain single audits, and are therefore not 
represented in this database. Additionally, some entities required to 
report may not do so, and others may report inaccurate data. Despite 
these limitations, we determined that these data were sufficiently 
reliable for the purpose of describing Title I-related findings in 
submitted audits of school districts. 

In order to isolate and analyze single audit data for school 
districts, we used codes indicating the type of entity being audited 
as assigned by U.S. Census Bureau staff reviewing single audit 
submissions. We included all entries coded as pertaining to school 
districts with Title I expenditures in our universe. Due to 
complexities in how school districts are organized, as well as 
potential inconsistencies in how entities are coded by U.S. Census 
Bureau staff, we manually reviewed entries with Title I expenditures 
that were either missing an entity code or had an entity code that did 
not clearly indicate that the audited entity was a school district. We 
kept all entries in categories where we were able to determine that 
the large majority of records corresponded with school districts, and 
removed all entries in categories where this was not the case. 

We conducted this performance audit from May 2010 through June 2011 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: School District Profiles: 

The following district profiles provide a snapshot of Title I 
expenditures in the 12 school districts we reviewed for the 2008-2009 
school year. We obtained data from a variety of sources, including the 
districts themselves, the states, and the National Center for 
Education Statistics.[Footnote 59] We attempted to provide data that 
are comparable, but each state, and in some cases, each district, had 
its own accounting system and its own accountability systems. 
Districts did not account for the same types of expenditures in the 
same ways. Similarly, each state has its own tests for 8th grade 
reading and mathematics. While it may be appropriate to compare 
achievement results within a state, it would not be appropriate to 
compare achievement results across states. In addition, we provide 
some background and demographic information on each district, but each 
district has unique needs and characteristics that may not be 
reflected in the background information provided in this appendix. 

Iberia Parish School System: 
Rural Louisiana: 

District characteristics: 

Geographic category: town (fringe). 

Total schools in district: 36. 

Number of schools receiving Title I funds: 22 (61%); 
Schoolwide programs: 21 (95%); 
Targeted assistance programs: 1 (5%). 

Number of Title I schools in need of improvement, corrective action,
or restructuring: 1 (3%). 

Total number of students: 13,797. 

Percentage of students on free or reduced lunch: 66%. 

Student demographics: 
White: 49.9%; 
African American: 44.5%; 
Asian/Pacific Islander: 3.5%; 
Latino: 1.9%; 
Native American: 0.2%. 

District report card: 

Graduation rate: 76.3%. 

Reading (8th grade achievement): 
District: 65%; 
State: 61%. 

Mathematics (8th grade achievement): 
District: 69%; 
State: 58%. 

Source: GAO analysis of state and district data; National Center for 
Education Statistics Common Core of Data (geographic category, total 
number of students, percentage of students on free or reduced lunch, and
student demographic data). 

Examples of initiatives funded by Title I: 
* Data driven decision making/assessments; 
* Extended day; 
* Reading interventionists. 

2009 Title I overview: 

District revenue: 
Title I as a percentage of total district revenues: 3.2%; $5.1 million; 
Total district revenues: $156.6 million. 

Overall Title I expenditures: 
Salaries: 66%; 
Benefits: 15%; 
Materials and supplies: 10%; 
Purchased services: 5%; 
Indirect costs: 4%. 

Services delivered by top five vendors: 
* Early intervention program; 
* Math and reading program; 
* Supplemental reading program; 
* Desktop computers for reading program (2 vendors). 

Title I staff (full-time equivalents): 

Instructional (55 total): 82%; 
Teachers: 19; 
Teacher aides/paraprofessionals: 36. 

Administrative positions (9 total): 13%; 
Administrators: 5; 
Clerical: 3. 

Instructional support (3 total): 5%; 
Librarian/other: 2; 
Therapists, specialists, and counselors: 2. 

Overall Title I budget (Showing discretionary and required 
reservations): 

Discretionary: 89%; 
Administrative: 4%; 
Indirect administrative: 4%; 
Preschool or extended school day/year: 11%; 
Professional development: 3%; 
Other[A]: 25%; 
Remaining from grant 42%.  

Required reservations: 6%; 
Professional development 3%; 
School improvement 3%. 

Parental involvement: 3%. 

Special student populations: 2%; 
At-risk students[B]: 1%; 
Nonpublic school students: less than 1%. 

Source: GAO analysis of district information. 

Note: Numbers may not add to 100 percent due to rounding. 

[A] Districtwide instructional program. 
[B] Includes homeless, migrant, and limited English proficient 
students. 

[End of Iberia Parish School System] 

St. Tammany Parish Public Schools: 
Suburban New Orleans, Louisiana: 

characteristics: 

Geographic category: suburb (small). 

Total schools in district: 54. 

Number of schools receiving Title I funds: 21 (39%); 
Schoolwide programs: 21 (100%); 
Targeted assistance programs: none. 

Number of Title I schools in need of improvement, corrective action,
or restructuring: none. 

Total number of students: 35,490. 

Percentage of students on free or reduced lunch: 43%. 

Student demographics: 
White: 75.8%; 
African American: 19.1%; 
Latino: 3.1%; 
Asian/Pacific Islander: 1.6%; 
Native American: 0.4%. 

District report card: 

Graduation rate: 77.2%; 

Reading (8th grade achievement): 
District: 76%; 
State: 61%. 

Mathematics (8th grade achievement): 
District: 74%; 
State: 58%. 

Source: GAO analysis of state and district data; National Center for 
Education Statistics Common Core of Data (geographic category, total 
number of students, percentage of students on free or reduced lunch, and
student demographic data). 

Examples of initiatives funded by Title I: 

* Job embedded professional development, including instructional
coaching; 
* Data driven decision making; 
* Student engagement. 

2009 Title I overview: 

District revenue: 
Title I as a percentage of total district revenues: 1.4%; $6.2 million; 
Total district revenues: $442.5 million. 

Overall Title I expenditures: 
Salaries: 57%; 
Benefits: 15%; 
Materials and supplies: 20%; 
Purchased services: 5%; 
Indirect costs: 3%. 

Title I staff (full-time equivalents): 

Instructional (57 total): 87%; 
Teachers: 29; 
Teacher aides/paraprofessionals: 28. 

Administrative positions (8 total): 13%; 
Administrators: 4; 
Clerical: 4. 

Instructional support (1 total): 2%; 
Librarian/other: 1. 

Overall Title I budget (Showing discretionary and required 
reservations): 

Discretionary: 78%; 
Administrative: 9%; 
Indirect administrative: 6%; 
Remaining from grant 64%.  

Required reservations: 15%; 
Schools in need of improvement: 
Professional development 15%. 

Parental involvement: 1%. 

Special student populations: 6%; 
At-risk students[A]: 4%; 
Neglected and delinquent: less than 1%; 
Nonpublic school students: 1%. 

Source: GAO analysis of district information. 

Note: Numbers may not add to 100 percent due to rounding. 

[A] Includes homeless, migrant, and limited English proficient 
students. 

[End of St. Tammany Parish Public Schools] 

Orleans Parish School Board: 
New Orleans, Louisiana: 

District characteristics: 

Geographic category: city (midsize). 

Total schools in district: 19. 

Number of schools receiving Title I funds: 19 (100%); 
Schoolwide programs: 19 (100%); 
Targeted assistance programs: none. 

Number of Title I schools in need of improvement, corrective action,
or restructuring: 2 (11%). 

Total number of students: 10,109. 

Percentage of students on free or reduced lunch: 69%. 

Student demographics: 
African American: 76.5%; 
White: 15.1%; 
Asian/Pacific Islander: 5.7%; 
Latino: 2.6%; 
Native American: 0.1%. 

District report card: 

Graduation rate: 91.1%. 

Reading (8th grade achievement): 
District: 78%; 
State: 61%. 

Mathematics (8th grade achievement): 
District: 78%; 
State: 58%. 

Source: GAO analysis of state and district data; National Center for 
Education Statistics Common Core of Data (geographic category, total 
number of students, percentage of students on free or reduced lunch, and
student demographic data). 

Examples of initiatives funded by Title I: 

* Data driven decision making/assessments; 
* Classroom technology; 
* Extended day or year. 

2009 Title I overview: 

District revenue: 
Title I as a percentage of total district revenues: 7.6%; $21.5 
million; 
Total district revenues: $283.1 million. 

Overall Title I expenditures: 
Salaries: 28%; 
Benefits: 7%; 
Services: 28%; 
Materials and supplies: 19%; 
Indirect costs: 12%; 
Equipment: 6%. 

Services delivered by top five vendors: 
* Services to private schools; 
* Computers and other classroom equipment; 
* Literacy remediation; 
* Test practice materials; 
* Computers (skills practice). 

Title I staff (full-time equivalents): 

Instructional (275 total): 97%; 
Teachers: 165; 
Teacher aides/paraprofessionals: 110. 

Administrative positions (7 total): 3%; 
Administrators: 4; 
Clerical: 4. 

Instructional support (1 total): 1%; 
Librarian/other: 1. 

Overall Title I budget (Showing discretionary and required 
reservations): 

Discretionary: 84%; 
Administrative: 1%; 
Indirect administrative: 10%; 
Other[A]: 20%; 
Remaining from grant 53%.  

Required reservations: 5%; 
Schools in need of improvement: 
Professional development 4%; 
School improvement: less than 1%. 

Parental involvement: 3%. 

Special student populations: 9%; 
At-risk students[B]: 1%; 
Neglected and delinquent: less than 1%; 
Nonpublic school students: 7%. 

Source: GAO analysis of district information. 

Note: Numbers may not add to 100 percent due to rounding. Orleans 
Parish 2008-2009 Title I budget includes carryover amount that is 
larger than the allocation for the year. 

[A] Districtwide instructional program. 

[B] Includes homeless, migrant, and limited English proficient 
students. 

[End of Orleans Parish School Board] 

Southeast Local School District (Wayne County): 
Rural Ohio: 

District characteristics: 

Geographic category: rural (distant). 

Total schools in district: 6. 

Number of schools receiving Title I funds: 4 (67%); 
Schoolwide programs: 4 (100%); 
Targeted assistance programs: none. 

Number of Title I schools in need of improvement, corrective action,
or restructuring: none. 

Total number of students: 1,675. 

Percentage of students on free or reduced lunch: 35%. 

Student demographics: 
White: 97.4%; 
Latino: 1.1%; 
Asian/Pacific Islander: 0.7%; 
African American: 0.5%; 
Native American: 0.1%. 

District report card: 

Graduation rate: 97.2%. 

Reading (8th grade achievement): 
District: 84.3%; 
State: 72%. 

Mathematics (8th grade achievement): 
District: 90.4%; 
State: 71%. 

Source: GAO analysis of state and district data; National Center for 
Education Statistics Common Core of Data (geographic category, total 
number of students, percentage of students on free or reduced lunch, and
student demographic data). 

Examples of initiatives funded by Title I: 

* Smaller classes; 
* Pull-out classes; 
* Preschool. 

2009 Title I overview: 

District revenue: 
Title I as a percentage of total district revenues: 6.8%; $1.0 million; 
Total district revenues: $14.9 million. 

Overall Title I expenditures: 
Salaries: 71%; 
Benefits: 27%; 
Purchase Services: 1%; 
Equipment: 1%. 

Services delivered by top five vendors: 
* Software license; 
* Smartboard equipment; 
* Photocopy machine; 
* Catering for a parent involvement banquet; 
* Preschool supplies. 

Title I staff (full-time equivalents): 

Instructional (15 total): 95%; 
Teachers: 12; 
Teacher aides/paraprofessionals: 3. 

Administrative positions (less than 1 total): 5%; 
Administrators: less than 1; 
Clerical: less than 1. 

Overall Title I budget (Showing discretionary and required 
reservations): 

Discretionary: 90%; 
Administrative: 7%; 
Preschool or extended school day/year: 2%; 
Remaining from grant 80%.  

Required reservations: 

Parental involvement: 10%. 

Special student populations: less than 1%; 
At-risk students[A]: less than 1%; 
Nonpublic school students: less than 1%. 

Source: GAO analysis of district information. 

Note: Numbers may not add to 100 percent due to rounding. 

[A] Includes homeless, migrant, and limited English proficient 
students. 

[End of Southeast Local School District (Wayne County)] 

Lakewood City School District: 
Suburban Cleveland, Ohio: 

District characteristics: 

Geographic category: suburb (large). 

Total schools in district: 10. 

Number of schools receiving Title I funds: 6 (60%); 
Schoolwide programs: 5 (83%); 
Targeted assistance programs: 1 (17%); 

Number of Title I schools in need of improvement, corrective action,
or restructuring: 1 (10%). 

Total number of students: 5,867. 

Percentage of students on free or reduced lunch: 45%. 

Student demographics: 
White: 77.7%; 
African American: 9.5%; 
Asian/Pacific Islander: 3.5%; 
Latino: 3.7%; 
Native American: 0.4%. 

District report card: 

Graduation rate: 88.7%. 

Reading (8th grade achievement): 
District: 82.3%; 
State: 72%. 

Mathematics (8th grade achievement): 
District: 76.5%; 
State: 71%. 

Source: GAO analysis of state and district data; National Center for 
Education Statistics Common Core of Data (Geographic category, total 
number of students, percentage of students on free or reduced lunch, and
student demographic data). 

Examples of initiatives funded by Title I: 

* Pull out classes; 
* Instructional coaches; 
* Professional development. 

2009 Title I overview: 

District revenue: 
Title I as a percentage of total district revenues: 3%; $2.0 million; 
Total district revenues: $68.5 million. 

Overall Title I expenditures: 
Salaries: 80%; 
Benefits: 17%; 
Material and supplies: 2%; 
Purchase Services: 1%. 

Title I staff (full-time equivalents): 

Instructional (25 teachers): 85%. 

Administrative positions (3 total): 10%; 
Administrators: less than 1; 
Family engagement: 3. 

Instructional support (2 instructional coaches): 5%. 

Overall Title I budget (Showing discretionary and required 
reservations): 

Discretionary: 80%; 
Administrative: 5%; 
Other[A]: 11%; 
Remaining from grant 64%.  

Required reservations: 

Schools in need of improvement: 15%; 
Professional development: 10%; 
SES/school choice: 5%. 

Parental involvement: 1%. 

Special student populations: 4%; 
At-risk students[A]: less than 1%; 
Nonpublic school students: 3%. 

Source: GAO analysis of district information. 

Note: Numbers may not add to 100 percent due to rounding. 

[A] Salary differential and teacher facilitator. 

[B] Includes homeless, migrant, and limited English proficient 
students. 

[End of Lakewood City School District] 

Cleveland Metropolitan School District: 
Cleveland, Ohio: 

District characteristics: 

Geographic category: city (large). 

Total schools in district: 112. 

Number of schools receiving Title I funds: 108 (98%); 
Schoolwide programs: 106 (95%); 
Targeted assistance programs: none. 

Number of Title I schools in need of improvement, corrective action,
or restructuring: 81 (72%). 

Total number of students: 52,358. 

Percentage of students on free or reduced lunch: 81%. 

Student demographics: 
African American: 65.3%; 
White: 14.2%; 
Latino: 11.0%; 
Asian/Pacific Islander: 0.6%; 
Native American: 0.3%. 

District report card: 

Graduation rate: 54.3%. 

Reading (8th grade achievement): 
District: 44.3%; 
State: 72%. 

Mathematics (8th grade achievement): 
District: 34.8%; 
State: 71%. 

Source: GAO analysis of state and district data; National Center for 
Education Statistics Common Core of Data (geographic category and 
student demographic data). 

Examples of initiatives funded by Title I: 

* Certified teachers for class size reduction; 
* Instructional coaches; 
* Professional development. 

2009 Title I overview: 

District revenue: 
Title I as a percentage of total district revenues: 8.1%; $56 million; 
Total district revenues: $693.5 million. 

Overall Title I expenditures: 
Salaries: 62%; 
Benefits: 19%; 
Purchase Services: 14%; 
Material and supplies: 3%; 
Indirect administrative costs: 1%. 

Services delivered by top five vendors: 
* Supplemental educational services (4 vendors); 
* Rental space for professional development. 

Title I staff (full-time equivalents): 

Instructional (425 total): 78%; 
Teachers 415; 
Teacher aides/paraprofessionals 5; 
Tutors/other 5. 

Instructional support (62 total): 11%; 
Instructional coach 34; 
Librarian/other 16; 
Therapists, specialists, and counselors 12. 

Administrative positions (58 total): 11%; 
Administrators: 4; 
Family engagement: 54. 

Instructional support (2 instructional coaches): 5%. 

Overall Title I budget (Showing discretionary and required 
reservations): 

Discretionary: 67%; 
Administrative: 4%; 
Indirect administrative: less than 1%; 
Professional development: 5%; 
Other[A]: 25%; 
Remaining from grant 32%.  

Required reservations: 

Schools in need of improvement: 28%; 
Professional development: 10%; 
SES/school choice: 18%. 

Parental involvement: 1%. 

Special student populations: 5%; 
At-risk students[A]: less than 1%; 
Nonpublic school students: 4%. 

Source: GAO analysis of district information. 

Note: Numbers may not add to 100 percent due to rounding. 

[A] Salary differential. 

[B] Includes homeless, migrant, and limited English proficient 
students. 

[End of Cleveland Metropolitan School District] 

Scituate School Department: 
Scituate, Rhode Island: 

District characteristics: 

Geographic category: rural (fringe). 

Total schools in district: 5. 

Number of schools receiving Title I funds: 1 (20%); 
Schoolwide programs: none; 
Targeted assistance programs: 1 (100%). 

Number of Title I schools in need of improvement, corrective action,
or restructuring: none. 

Total number of students: 1,713. 

Percentage of students on free or reduced lunch: 10%. 

Student demographics: 
White: 97.6%: 
Asian/Pacific Islander: 1.0%: 
Latino: 0.8%; 
African American: 0.4%; 
Native American: 0.3%. 

District report card: 

Graduation rate: 85%. 

Reading (8th grade achievement); 
District: 87%; 
State: 62%. 

Mathematics (8th grade achievement); 
District: 75%; 
State: 53%. 

Source: GAO analysis of state and district data; National Center for 
Education Statistics Common Core of Data (geographic category, total 
number of students, percentage of students on free or reduced lunch, and
student demographic data). 

Examples of initiatives funded by Title I: 

* Pull out classes; 
* Reading intervention. 

2009 Title I overview: 

District revenue: 
Title I as a percentage of total district revenues: 0.8%; $165,854; 
Total district revenues: $21.1 million. 

Overall Title I expenditures: 
Salaries: 75%; 
Benefits: 25%. 

Services delivered by top five vendors: 
None, all funds were spent on salaries and benefits. 

Title I staff (full-time equivalents): 

Instructional (2 total): 100%. 

Overall Title I budget (Showing discretionary and required 
reservations): 

Discretionary: 99.9%; 
Remaining from grant 99.9%.  

Required reservations: 

Special student populations: less than 1%; 
At-risk students[A]: less than 1%. 

Source: GAO analysis of district information. 

Note: Numbers may not add to 100 percent due to rounding. 

[A] Includes homeless, migrant, and limited English proficient 
students. 

[End of Scituate School Department] 

Cranston Public Schools: 
Cranston, Rhode Island: 

District characteristics: 

Geographic category: city (small). 

Total schools in district: 22. 

Number of schools receiving Title I funds: 8 (36%); 
Schoolwide programs: 4 (50%); 
Targeted assistance programs: 4 (50%). 

Number of Title I schools in need of improvement, corrective action,
or restructuring: none. 

Total number of students: 10,684. 

Percentage of students on free or reduced lunch: 28%. 

Student demographics: 
White: 73.5%; 
Latino: 13.9%; 
Asian/Pacific Islander: 6.9%; 
African American: 4.6%; 
Native American: 0.5%. 

District report card: 

Graduation rate: 79.5%. 

Reading (8th grade achievement): 
District: 68%; 
State: 62%. 

Mathematics (8th grade achievement): 
District: 51%; 
State: 53%. 

Source: GAO analysis of state and district data; National Center for 
Education Statistics Common Core of Data (geographic category, total 
number of students, percentage of students on free or reduced lunch, and
student demographic data). 

Examples of initiatives funded by Title I: 

* Interventionists; 
* Professional development; 
* Extended day or year. 

2009 Title I overview: 

District revenue: 
Title I as a percentage of total district revenues: 1.7%; $2.3 million; 
Total district revenues: $134.6 million. 

Overall Title I expenditures: 
Salaries: 68%; 
Benefits: 24%; 
Supplies and materials: 2%; 
Purchased services: 1%. 

Services delivered by top five vendors: 
* Computers and supplies (2 vendors); 
* Professional development; 
* Instructional supplies; 
* Internet service. 

Title I staff (full-time equivalents): 

Instructional (16 total): 98%; 
Teachers: 16; 
Teacher aides/paraprofessionals: less than 1. 

Administrative positions: 2%; 
(less than 1 administrators). 

Overall Title I budget (Showing discretionary and required 
reservations): 

Discretionary: 92%; 
Administrative: 5%; 
Remaining from grant 87%.  

Required reservations: 

Parental involvement: 5%. 

Special student populations: 3%; 
At-risk students[A]: less than 1%; 
Nonpublic school students: 2%. 

Source: GAO analysis of district information. 

Note: Numbers may not add to 100 percent due to rounding. 

[A] Includes homeless, migrant, and limited English proficient 
students. 

[End of Cranston Public Schools] 

Providence Public School Department: 
Providence, Rhode Island: 

District characteristics: 

Geographic category: city (midsize). 

Total schools in district: 47. 

Number of schools receiving Title I funds: 47 (100%); 
Schoolwide programs: 47 (100%); 
Targeted assistance programs: none. 

Number of Title I schools in need of improvement, corrective action,
or restructuring: 22 (47%). 

Total number of students: 23,710. 

Percentage of students on free or reduced lunch: 86%. 

Student demographics: 
Latino: 59.6%; 
African American: 22.0%; 
White: 11.6%; 
Asian/Pacific Islander: 5.6%; 
Native American: 0.6%. 

District report card: 

Graduation rate: 66.5%. 

Reading (8th grade achievement): 
District: 40%; 
State: 62%. 

Mathematics (8th grade achievement): 
District: 28%; 
State: 53%. 

Source: GAO analysis of state and district data; National Center for 
Education Statistics Common Core of Data (geographic category, total 
number of students, percentage of students on free or reduced lunch, and
student demographic data). 

Examples of initiatives funded by Title I: 

* Data driven assessments; 
* Curriculum alignment; 
* Instructional coaches. 

2009 Title I overview: 

District revenue: 
Title I as a percentage of total district revenues: 6.5%; $23.5 
million; 
Total district revenues: $260.3 million. 

Overall Title I expenditures: 
Salaries: 40%; 
Benefits: 18%; 
Services: 27%; 
Supplies and materials: 9%; 
Indirect administrative costs: 3%; 
Equipment: 2%. 

Services delivered by top five vendors: 
* Supplemental educational services (3 vendors); 
* Coaching to assist launch of language program; 
* Materials and professional development. 

Title I staff (full-time equivalents): 

Instructional (95 total): 65%; 
Teachers: 13; 
Teacher aides/paraprofessionals: 83. 

Instructional support (30 total): 20%; 
Instructional coach: 17; 
Librarian/other: 5; 
Therapists, specialists, and counselors: 8. 

Administrative positions (22 total): 15%; 
Administrators: 10; 
Clerical: 4; 
Family engagement: 8. 

Overall Title I budget (Showing discretionary and required 
reservations): 

Discretionary: 65%; 
Administrative: 15%; 
Other[A]: 10%; 
Remaining from grant 40%.  

Required reservations: 

Schools in need of improvement: 28%; 
Professional development: 16%; 
SES/school choice: 13%. 

Parental involvement: 3%. 

Special student populations: 4%; 
At-risk students[B]: less than 1%; 
Neglected and delinquent: less than 1%; 
Nonpublic school students: 3%. 

Source: GAO analysis of district information. 

Note: Numbers may not add to 100 percent due to rounding. 

[A] Includes carryover amounts and administrative adjustment. 

[B] Includes homeless, migrant, and limited English proficient 
students. 

[End of Providence Public School Department] 

Puyallup School District: 
Suburban Tacoma, Washington: 

District characteristics: 

Geographic category: suburb (large). 

Total schools in district: 34. 

Number of schools receiving Title I funds: 12 (35%); 
Schoolwide programs: 5 (42%); 
Targeted assistance programs: 7 (58%). 

Number of Title I schools in need of improvement, corrective action,
or restructuring: 3 (9%). 

Total number of students: 20,911. 

Percentage of students on free or reduced lunch: 24%. 

Student demographics: 
White: 71.8%; 
Asian/Pacific Islander: 7.0%; 
Latino: 6.8%; 
African American: 4.2%; 
Native American: 1.5%. 

District report card: 

Graduation rate: 70.6%. 

Reading (8th grade achievement); 
District: 74.4%; 
State: 68%. 
Mathematics (8th grade achievement); 
District: 53%; 
State: 51%. 

Source: GAO analysis of state and district data; National Center for 
Education Statistics Common Core of Data (geographic category, total 
number of students, percentage of students on free or reduced lunch, and
student demographic data). 

Examples of initiatives funded by Title I: 

* Pull out classes; 
* In-class support; 
* Supplemental instructional and curriculum materials. 

2009 Title I overview: 

District revenue: 
Title I as a percentage of total district revenues: 0.8%; $1.6 million; 
Total district revenues: $193.2 million. 

Overall Title I expenditures: 
Salaries: 70%; 
Benefits: 23%; 
Indirect administrative costs: 4%; 
Supplies and materials: 2%; 
Purchased services: 1%. 

Services delivered by top five vendors: 
* Reading materials; 
* Translation software; 
* Computer hardware; 
* Math/Reading materials; 
* Supplemental materials and professional development. 

Title I staff (full-time equivalents): 

Instructional (22 total): 98%; 
Teachers: 12; 
Teacher aides/paraprofessionals: 10. 

Instructional support (30 total): 20%; 
Instructional coach: 17; 
Librarian/other: 5; 
Therapists, specialists, and counselors: 8. 

Administrative positions (less than 1 total): 2%; 
Administrators: less than 1; 
Clerical: less than 1. 

Overall Title I budget (Showing discretionary and required 
reservations): 

Discretionary: 98%; 
Indirect administrative: 4%; 
Remaining from grant 94%.  

Required reservations: 

Schools in need of improvement: less than 1%; 
Professional development: less than 1%. 

Parental involvement: 1%. 

Special student populations: less than 1%; 
At-risk students[A]: less than 1%. 

Source: GAO analysis of district information. 

Note: Numbers may not add to 100 percent due to rounding. 

[A] Includes homeless, migrant, and limited English proficient 
students. 

[End of Puyallup School District] 

North Thurston Public Schools: 
Suburban Olympia, Washington: 

District characteristics: 

Geographic category: suburb (midsize). 

Total schools in district: 19. 

Number of schools receiving Title I funds: 5 (26%); 
Schoolwide programs: 3 (60%); 
Targeted assistance programs: 2 (40%). 

Number of Title I schools in need of improvement, corrective action,
or restructuring: 2 (11%). 

Total number of students: 13,924. 

Percentage of students on free or reduced lunch: 33%. 

Student demographics: 
White: 60.2%: 
Asian/Pacific Islander: 13.1%; 
Latino: 10.5%; 
African American: 9.1%; 
Native American: 3.2%. 

District report card: 

Graduation rate: 79.3%. 

Reading (8th grade achievement): 
District: 68.6%; 
State: 68%. 
Mathematics (8th grade achievement): 
District: 45.8%; 
State: 51%. 

Source: GAO analysis of state and district data; National Center for 
Education Statistics Common Core of Data (geographic category, total 
number of students, percentage of students on free or reduced lunch, and
student demographic data). 

Examples of initiatives funded by Title I: 

* Instructional coaches; 
* Pull out classes; 
* Tutoring. 

2009 Title I overview: 

District revenue: 
Title I as a percentage of total district revenues: 1.3%; $1.6 million; 
Total district revenues: $124.5 million. 

Overall Title I expenditures: 
Salaries: 68%; 
Benefits: 23%; 
Indirect costs: 3%; 
Supplies and materials: 3%; 
Purchased services: 2%. 

Services delivered by top five vendors: 
* Reading curriculum and professional development; 
* Professional development; 
* Reading program support and training; 
* Books for reading program; 
* Training for Title I staff. 

Title I staff (full-time equivalents): 

Instructional (21 total): 98%; 
Teachers: 12; 
Teacher aides/paraprofessionals: 8. 

Administrative positions (less than 1 clerical): 2%. 

Overall Title I budget (Showing discretionary and required 
reservations): 

Discretionary: 84%; 
Administrative: 6%; 
Remaining from grant 78%.  

Required reservations: 

Schools in need of improvement: 15%; 
Professional development: 10%; 
SES/school choice: 5%. 

Parental involvement: 1%. 

Special student populations: less than 1%; 
At-risk students[A]: less than 1%; 
Neglected and delinquent: less than 1%. 

Source: GAO analysis of district information. 

Note: Numbers may not add to 100 percent due to rounding. 

[A] Includes homeless, migrant, and limited English proficient 
students. 

[End of North Thurston Public Schools] 

Seattle Public Schools: 
Seattle, Washington: 

District characteristics: 

Geographic category: city (large). 

Total schools in district: 99. 

Number of schools receiving Title I funds: 33 (33%); 
Schoolwide programs: 31 (94%); 
Targeted assistance programs: 2 (6%). 

Number of Title I schools in need of improvement, corrective action,
or restructuring: 23 (23%). 

Total number of students: 45,968. 

Percentage of students on free or reduced lunch: 39%. 

Student demographics: 
White: 43.4%; 
Asian/Pacific Islander: 22.0%; 
African American: 21.1%; 
Latino: 11.7%; 
Native American: 1.9%. 

District report card: 

Graduation rate: 70.1%. 

Reading (8th grade achievement): 
District: 69.9%; 
State: 68%. 

Mathematics (8th grade achievement): 
District: 53.9%; 
State: 51%. 

Source: GAO analysis of state and district data; National Center for 
Education Statistics Common Core of Data (Geographic category, total 
number of students, percentage of students on free or reduced lunch, and
student demographic data). 

Examples of initiatives funded by Title I: 

* Instructional coaches; 
* Professional development; 
* Summer school/extended day programs. 

2009 Title I overview: 

District revenue: 
Title I as a percentage of total district revenues: 2.5%; $13.2 
million; 
Total district revenues: $518.2 million. 

Overall Title I expenditures: 
Salaries: 58%; 
Benefits: 19%; 
Supplies and materials: 10%; 
Purchased services: 9%; 
Indirect administrative costs: 4%. 

Services delivered by top five vendors: 
* Supplemental educational services (4 vendors); 
* Tutoring/services to eligible private school students. 

Title I staff (full-time equivalents): 

Instructional (98 total): 73%; 
Teachers: 47; 
Teacher aides/paraprofessionals: 52; 
Tutors/other: 0. 

Administrative positions (5 total): 4%; 
Administrators: 3; 
Clerical: 2. 

Overall Title I budget (Showing discretionary and required 
reservations): 

Discretionary: 82%; 
Administrative: 10%; 
Extended day/summers/Preschool: 11%; 
Indirect administrative: 4%; 
Remaining from grant 56%.  

Required reservations: 

Schools in need of improvement: 14%; 
Professional development: 10%; 
SES/school choice: 4%. 

Parental involvement: 1%. 

Special student populations: 3%; 
At-risk students[A]: less than 1%; 
Neglected and delinquent: less than 1%; 
Nonpublic school students: 2%. 

Source: GAO analysis of district information. 

[A] Includes homeless, migrant, and limited English proficient 
students. 

[End of Seattle Public Schools] 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

George A. Scott, (202) 512-7215 or scottg@gao.gov: 

Staff Acknowledgments: 

The following staff members made key contributions to this report: 
Cornelia Ashby, Director; Betty Ward-Zukerman, Assistant Director; 
Lara Laufer, Analyst-in-Charge; Matthew Alemu; Phyllis Anderson; James 
Bennett; Jessica Botsford; William Colvin; Susannah Compton; Ranya 
Elias; Catherine Hurley; Kimberly McGatlin; Sarah McGrath; Jean 
McSween; Maria Morton; and Ellen Phelps Ranen. 

[End of section] 

Related GAO Products: 

Recovery Act: Opportunities to Improve Management and Strengthen 
Accountability over States' and Localities' Uses of Funds. [hyperlink, 
http://www.gao.gov/products/GAO-10-999]. Washington, D.C.: September 
20, 2010. 

Recovery Act: States Could Provide More Information on Education 
Programs to Enhance the Public's Understanding of Fund Use. 
[hyperlink, http://www.gao.gov/products/GAO-10-807]. Washington, D.C.: 
July 30, 2010. 

No Child Left Behind Act: Education Actions May Help Improve 
Implementation and Evaluation of Supplemental Educational Services. 
[hyperlink, http://www.gao.gov/products/GAO-07-738T]. Washington, 
D.C.: April 8, 2007. 

No Child Left Behind Act: Education Actions Needed to Improve Local 
Implementation and State Evaluation of Supplemental Educational 
Services. [hyperlink, http://www.gao.gov/products/GAO-06-758]. 
Washington, D.C.: August 4, 2006. 

No Child Left Behind Act: Improvements Needed in Education's Process 
for Tracking States' Implementation of Key Provisions. [hyperlink, 
http://www.gao.gov/products/GAO-04-734]. Washington, D.C.: September 
30, 2004. 

Title I: Although Definitions of Administrative Expenditures Vary, 
Almost All School Districts Studied Spent Less Than 10 Percent on 
Administration. [hyperlink, http://www.gao.gov/products/GAO-03-386]. 
Washington, D.C.: April 7, 2003. 

Disadvantaged Students: Fiscal Oversight of Title I Could Be Improved. 
[hyperlink, http://www.gao.gov/products/GAO-03-377]. Washington, D.C.: 
February 28, 2003. 

[End of section] 

Footnotes: 

[1] Throughout this report, we refer to Title I, Part A of ESEA, as 
amended as "Title I." Part A of Title I is directed at improving basic 
programs operated by local educational agencies, which we refer to as 
"school districts" in this report. 

[2] Pub. L. No. 111-5, 123 Stat. 115, 181. Districts were required to 
obligate 85 percent of the funds by September 30, 2010, unless granted 
a waiver, and must obligate all of their funds by September 30, 2011. 
We have reported separately on the use of these additional funds, 
which were first made available in April 2009. See, for example, GAO, 
Recovery Act: States' and Localities' Current and Planned Uses of 
Funds While Facing Fiscal Stresses, [hyperlink, 
http://www.gao.gov/products/GAO-09-829] (Washington, D.C.: July 8, 
2009). 

[3] Pub. L. No. 107-110, sec. 101, § 1904, 115 Stat. 1425, 1619 
(codified at 20 U.S.C. § 6574). The No Child Left Behind Act of 2001 
reauthorized and amended ESEA. 

[4] GAO, Title I: Although Definitions of Administrative Expenditures 
Vary, Almost All School Districts Studied Spent Less Than 10 Percent 
on Administration, [hyperlink, http://www.gao.gov/products/GAO-03-386] 
(Washington, D.C.: Apr. 7, 2003). 

[5] The Office of Management and Budget has designated the U.S. Census 
Bureau to operate the Federal Audit Clearinghouse, which serves as the 
central collection point, repository, and distribution center for 
single audit reports and maintains a database of single audit results. 

[6] U.S. Department of Education, Institute of Education Sciences, 
National Center for Education Evaluation and Regional Assistance, 
Final Report on the National Assessment of Title I: Summary of Key 
Findings (Washington, D.C., 2007). 

[7] 20 U.S.C. § 6333. 

[8] This annual survey of local governments is conducted by the U.S. 
Census Bureau under the authority provided in 13 U.S.C. § 182 and 
includes school system revenue and spending on instruction and support 
services, including administration. 

[9] L. Zhou, Revenues and Expenditures for Public Elementary and 
Secondary Education: School Year 2007-08 (Fiscal Year 2008), U.S. 
Department of Education, National Center for Education Statistics, 
2010-326 (Washington, D.C., 2010). 

[10] ESEA, as amended, requires all districts and schools receiving 
Title I funds to meet state adequate yearly progress (AYP) goals for 
their total student populations and for specified demographic 
subgroups, with the goal of all students reaching the proficient level 
on reading/language arts and mathematics tests by the 2013-2014 school 
year. If a school receiving federal Title I funding fails to meet its 
AYP target for two or more consecutive years, the school is designated 
in need of improvement. If the school fails to meet the AYP target for 
two years after being designated in need of improvement, it is 
identified for corrective action, which requires the district to take 
specific additional actions. After one full year of corrective action, 
a school that fails to meet its AYP goal is identified for 
restructuring. If a district does not make AYP in all grade spans 
within the district elementary, middle school, and high school for two 
consecutive years in either the language arts/literacy or mathematics 
content area, it is designated as a district in need of improvement. 
20 U.S.C. § 6316. 

[11] Schoolwide programs are required to include a comprehensive needs 
assessment of the school and schoolwide reform strategies, among other 
requirements. 

[12] To carry out administrative duties, a state may reserve 1 percent 
of amounts it receives under parts A, C, and D of Title I or $400,000, 
whichever is greater. 20 U.S.C. § 6304. 

[13] 20 U.S.C. §§ 6303(a) and 6303(e). 

[14] 20 U.S.C. §§ 6317(b)(1) and 6317(c)(2)(A). Only one of the 4 
states visited (WA) reserved Title I funds for awards to high 
performing schools. 

[15] 20 U.S.C. § 6316(c)(7). 

[16] 20 U.S.C. § 6316(b)(10). The public school choice provision 
requires school districts to permit students to transfer from the 
failing public school to another public school in the district that is 
not identified for improvement and requires the school district to pay 
for transportation. The supplemental educational services provision 
requires school districts to offer each eligible child additional 
educational services--typically tutoring--from state-approved and 
parent-selected providers. These services are in addition to the 
instruction provided during the school day. Under the law a wide range 
of organizations may apply to be providers, including nonprofit 
entities, for-profit entities, and school districts. See GAO, No Child 
Left Behind Act: Education Actions Needed to Improve Local 
Implementation and State Evaluation of Supplemental Educational 
Services, [hyperlink, http://www.gao.gov/products/GAO-06-758] 
(Washington, D.C.: Aug. 4, 2006). 

[17] 20 U.S.C. §§ 6321(a), 6321(b), and 6321(c). 

[18] 34 C.F.R. § 80.3. 

[19] U.S. Department of Education, Cost Allocation Guide for State and 
Local Governments (Washington, D.C.: September 2009). Direct 
expenditures are those that can be specifically identified with a 
program, such as the salaries and benefits of program administrators. 
Indirect expenditures are for resources that cannot be specifically 
identified with a program, such as the portion of expenditures for 
data processing or accounting that support the program. 

[20] Title I has a statutory requirement prohibiting the use of 
federal funds to supplant nonfederal funds, which requires the use of 
a restricted indirect cost rate, computed in accordance with 34 C.F.R. 
§§ 76.564-76.569. See 34 C.F.R. § 76.563. Education is responsible for 
approving indirect cost rates for state educational agencies. For 
school districts, the state educational agency is responsible for 
approving indirect cost rates on the basis of a plan approved by 
Education. 34 C.F.R. § 76.561. 

[21] 20 U.S.C. § 6313(c) and 34 C.F.R. § 200.78. 

[22] Congress passed the Single Audit Act of 1984 to promote, among 
other things, sound financial management, including effective internal 
controls, with respect to federal awards administered by nonfederal 
entities. The Single Audit Act, as amended, requires states, local 
governments, and nonprofit organizations expending $500,000 or more in 
federal awards in a year to obtain an audit in accordance with the 
requirements set forth in the act. A single audit consists of (1) an 
audit and opinions on the fair presentation of the financial 
statements and the Schedule of Expenditures of Federal Awards; (2) 
gaining an understanding of and testing internal control over 
financial reporting and the entity's compliance with laws, 
regulations, and contract or grant provisions that have a direct and 
material effect on certain federal programs (that is, the program 
requirements); and (3) an audit and an opinion on compliance with 
applicable program requirements for certain federal programs. In some 
cases, the Single Audit Act allows entities to elect to obtain a 
program-specific audit instead of a single audit. Throughout this 
report we use "Single Audit Act" to refer to the act as amended. See 
31 U.S.C. §§ 7501-7507. 

[23] Auditees are required to establish and maintain internal control 
that can reasonably be expected to help ensure compliance with federal 
laws, regulations, and program requirements. 

[24] States may use Title II funds to increase the number of highly 
qualified teachers in classrooms. This may be accomplished by 
recruiting and hiring highly qualified teachers as well as by 
providing professional development to help teachers become highly 
qualified. 

[25] Districts may target specific grade spans only after serving all 
schools in which the concentration of children from low-income 
families exceeds 75 percent. 20 U.S.C. §§ 6313(a)(3) and 6313(a)(4). 
Of the eight school districts that said they targeted funds at 
elementary levels, three also served a few high poverty middle schools. 

[26] U.S. Department of Education, Office of Planning, Evaluation and 
Policy Development, Policy and Program Studies Service, State and 
Local Implementation of the No Child Left Behind Act Volume VI--
Targeting and Uses of Federal Education Funds (Washington, D.C., 
January 2009). 

[27] In certain cases, using Title I funds in place of funds 
previously provided by the state or local government is not considered 
supplanting. The law authorizes an exception to the supplement not 
supplant rule, which allows state educational agencies or school 
districts to exclude from the supplanting analysis, supplemental state 
or local funds expended for programs that meet the intent and purposes 
of Title I. 20 U.S.C. § 6321(d). 

[28] 20 U.S.C. § 6316(c)(7). 

[29] According to its Title I application, about one-third of the low- 
income students in Orleans Parish attend private schools. Orleans 
Parish contracts with a vendor to provide services to these students, 
and these expenditures appear as services rather than as salaries and 
benefits. In addition, according to Orleans Parish officials, after 
Hurricane Katrina, Orleans Parish's student population fell 
drastically, while its Title I funding remained the same. As a result, 
Orleans Parish was unable to spend its Title I funds and received 
waivers allowing it to carry over large amounts of Title I funds. The 
district used these funds to make some long-term investments in 
schools' curricula and technology. 

[30] Educational Research Service, How do the Salaries in your 
District Compare with Districts Nationwide? E-bulletin Volume 37, 
Issue 1 (Arlington, VA, Sept. 3, 2009). 

[31] Due to wide variations in the ways in which districts coded staff 
functions, we were unable to determine what proportion of salaries and 
benefits was paid to teachers or paraprofessionals. 

[32] The targeting and uses study found that 59 percent of all Title I 
funds were used for instructional staff. 

[33] The ESEA, as amended most recently in 2001, strengthened 
requirements for teachers' aides. 20 U.S.C. §§ 6319(c) and 6319(d). 

[34] A Title I coordinator may be responsible for coordinating a 
district-wide or multi-school Title I program, including such duties 
as development of budgets, preparation of the Title I consolidated 
application, training Title I staff, and submitting Title I reports. 

[35] To examine how local school districts used federal education 
program funds, Education's team developed a dataset based primarily on 
district-level year-end revenue and expenditure reports for the 2004- 
2005 school year. In some cases it was necessary to use budget 
information from the districts' 2004-2005 applications for federal 
program funding to estimate how federal program funds were used. 
Because accounting codes and expenditure classifications differ across 
states (and sometimes across districts within a state), the study team 
developed a set of common accounting codes to standardize the revenue 
and expenditure data. The resulting dataset was used to produce 
national estimates of district expenditures of federal funds in major 
functional categories, such as administration, instruction, and 
instructional support. However, accounting categories and definitions 
used by individual states and districts did not always clearly align 
with the functional spending categories examined in Education's study. 

[36] GAO-03-386. The districts compared in this report were selected 
in part based on their use of a common financial system, which allowed 
for a direct comparison of administrative expenditures. 

[37] Our 2003 report reviewed five studies. Two of the studies used a 
representative sample and developed a national estimate. The other 
three studies sampled fewer districts, and their findings were not 
generalizable. Two studies based findings on budget estimates, while 
the other three used expenditure data. 

[38] Because supplemental educational services are generally selected 
by parents from a group of state approved vendors, these types of 
district expenditures were generally reflected in the "purchased 
services" category. 

[39] Although Orleans Parish is also an urban school district, it had 
a smaller percentage of schools in need of improvement than other 
selected urban districts. It had two schools (11 percent) in need of 
improvement because schools performing below the district average 
became part of the Recovery School District after Hurricane Katrina. 
Other factors help to explain its relatively high service 
expenditures. According to its Title I application, approximately one-
third of low-income students in Orleans Parish attend private school. 
Orleans Parish, like other districts, is required to provide services 
to Title I eligible students in private schools, and many of the 
services it provides are provided through vendors. 

[40] OMB Circular A-87 states that costs of meetings and conferences, 
the primary purpose of which is the dissemination of technical 
information, are allowable, including costs of meals. 

[41] School districts had a variety of terms for this category of 
expenditures, including equipment, capital outlay, and property. While 
requirements regarding school accounting differ from state to state, 
the National Center for Education Statistics publishes a financial 
accounting manual for state and local school systems, which represents 
a national set of standards and guidance for school system accounting. 
This handbook proposes using various criteria to distinguish between 
supplies and equipment, including how long an item is expected to last 
and whether its character changes with use. Another criterion is based 
on the dollar value of the item. The dollar value may vary based on 
the school district's capitalization threshold. School districts may 
take a variety of factors into consideration when determining what 
items to classify as supplies or equipment, including district rules 
about inventorying items. Education's regulations define equipment as 
having an acquisition cost of $5,000 or more per unit, while 
acknowledging that the recipients' policies may establish more 
restrictive limits. 34 C.F.R. § 80.3. 

[42] We did not include Orleans Parish in this analysis because it had 
a large carryover amount that year. 

[43] Education focused its monitoring efforts on the School 
Improvement Grants program for the 2010-2011 school year because the 
program, which received $546 million in fiscal year 2010, received an 
additional $3 billion in funding under the American Recovery and 
Reinvestment Act of 2009, and also underwent a significant change in 
its regulations. The School Improvement Grants program provides grants 
to states, which administer competitive subgrants to districts that 
demonstrate the greatest need for funds and the strongest commitment 
to using those funds to improve educational outcomes for students in 
their lowest-performing schools. 20 U.S.C. § 6303(g). 

[44] Title I requires that teachers and paraprofessionals who work in 
programs supported by Title I meet specific qualification 
requirements. 20 U.S.C. § 6319 and 20 U.S.C. § 7801(23). 

[45] 20 U.S.C. § 6318 (a)(3)(C). 

[46] Participating local educational agencies are required to provide 
eligible children attending private elementary and secondary schools, 
their teachers, and their families with Title I services or other 
benefits that are equitable to those provided to eligible public 
school children, their teachers, and their families. 20 U.S.C. § 6320. 

[47] 20 U.S.C. § 6321 (b). 

[48] OIG released 49 final audit reports between October 2002 and 
April 14, 2009 that addressed district financial controls over grants 
from the following programs: ESEA Title I, Title II, and Title V, and 
the Individuals with Disabilities Education Act. The OIG focused on 
the findings of the 41 audit reports with finding types that were 
common to 5 or more of these audits. 

[49] After OIG makes its recommendations, Education issues a Program 
Determination Letter, which is an official written notice from an 
authorized Education management official to an audited grantee that 
sets forth Education's decision on findings in an audit report, 
including all necessary actions and repayment of funds for which the 
grantee is responsible. As of May 2011, Education had not yet issued 
the Program Determination Letter for this audit. 

[50] OMB Circular No. A-87 requires employees who are expected to work 
solely on a single federal award or cost objective to periodically 
certify that the employees worked solely on that program for the 
period covered by the time and effort certification. Employees who 
work on multiple activities or cost objectives are required to file 
personal activity reports at least monthly that account for the total 
activity for which the employee is compensated and reflect a 
distribution of the employees' actual activity. 

[51] The total amount of Title I funds expended by local school 
districts in fiscal year 2009 is not available. However, according to 
Education, Congress provided roughly $13.9 billion for Title I grants 
to local school districts in its fiscal year 2008 appropriation. Title 
I limits to 15 percent the amount of the funds allocated to a local 
educational agency for any fiscal year that may be carried over (that 
is, remain available for obligation for one additional fiscal year). 
20 U.S.C. § 6339. As a result, approximately 85 percent of the $13.9 
billion reported by Education was required to be obligated in fiscal 
year 2009. 

[52] These compliance categories are established in OMB's Circular No. 
A-133 Compliance Supplement, and include topics such as allowable 
costs, cash management, and equipment and property management. 

[53] OMB Circular No. A-87 states that, among other criteria, to be 
allowable under federal awards, costs must be necessary and reasonable 
for proper and efficient performance and administration of federal 
awards; be allocable to federal awards under the provisions of the 
circular; be authorized or not prohibited under state or local laws or 
regulations; conform to any limitations or exclusions set forth in 
these principles, federal laws, terms, and conditions of the federal 
award, or other governing regulations as to types or amounts of cost 
items; and be consistent with policies, regulations, and procedures 
that apply uniformly to both federal awards and other activities of 
the governmental unit. 

[54] When examining internal controls over compliance, auditors 
evaluate the design of controls relevant to the compliance audit. 

[55] A material weakness in internal control over compliance is a 
deficiency, or combination of deficiencies, in internal control over 
compliance such that there is a reasonable possibility that material 
noncompliance with a requirement will not be prevented or detected and 
corrected on a timely basis. 

[56] Districts may also have material weaknesses in internal controls 
over financial statements. Twenty percent of fiscal year 2009 single 
audits for districts with Title I expenditures included such 
weaknesses. While these material weaknesses do not indicate that 
districts used Title I funds incorrectly, they may indicate a risk 
that funds could be misused without this being identified due to 
inaccuracies in financial data. 

[57] U.S. Department of Education, Policy and Program Studies Service, 
State and Local Implementation of the No Child Left Behind Act, Volume 
VI--Targeting and Uses of Federal Education Funds, (Washington, D.C., 
January 2009). 

[58] The Office of Management and Budget has designated the U.S. 
Census Bureau to operate the Federal Audit Clearinghouse. 

[59] Geographic categories for school districts are based on the 
National Center for Education Statistics' locale codes, which are 
based on an address's proximity to an urbanized area (a densely 
settled core with densely settled surrounding areas). These locale 
codes classify territory into four major types: city, suburban, town, 
and rural. Each type has three subcategories. For city and suburb, 
these are gradations of size--large, midsize, and small. Towns and 
rural areas are further distinguished by their distance from an 
urbanized area. They can be characterized as fringe, distant, or 
remote, reflecting progressively greater distance from the nearest 
urban area. 

[End of section] 

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